Dechra reveals another acquisition ahead of AGM

Ian Page, chief executive, Dechra Pharmaceuticals

Northwich veterinary products firm Dechra Pharmaceuticals released a trading update ahead of the company’s annual general meeting in London later this morning, and announced its latest acquisition.

The firm said its performance in the first quarter of its financial year was in line with management’s expectations, with continued year-on-year above market growth in both EU Pharmaceuticals and NA Pharmaceuticals.

It added: “The board is confident in achieving its expectations for the current financial year, and in the continued out-performance of the markets in which it operates. We remain confident that Dechra and its proven strategy is well placed to sustain growth.”

Dechra will announce its interim results for the six months to December 31, 2018, on February 25, 2019.

It company has also confirmed the acquisition of Laboratorios Vencofarma do Brasil Ltda, a company based in Londrina, Brazil, for a total consideration of £37.8m on a cash free/debt free basis.

Revenue in the year to December 31, 2017 was £11.6m.

The acquisition will be financed from the group’s existing cash and borrowing facilities.

Completion is expected in November, following the satisfaction of a number of customary conditions precedent.

Venco has a large portfolio of vaccines and other food producing animal products (FAP) which it sells predominantly within Brazil, and also in other South American and international markets.

It also has a small range of companion animal products (CAP) vaccines and pharmaceuticals, which are sold mainly on the Brazilian market.

Overall, it has more than 200 current product registrations. Brazil is the fourth biggest FAP market in the world, and vaccines is the fastest growing therapeutic area within FAP globally.

The acquisition provides Dechra with a strategically significant presence within the rapidly growing Brazilian and South American markets.

The Londrina site, in the state of Parana, houses all the Venco business functions, including product development, manufacturing operations, sales and marketing and regulatory affairs.

The site has enjoyed a period of recent significant investment in manufacturing operations, which has materially upgraded the facilities which have achieved regulatory licenses to operate.

Dechra will invest significantly over the next two to three years to develop the business and its presence in South America, and will continue to develop the existing Venco pipeline and registrations, register relevant Dechra products and establish the Dechra brand in the region.

Venco will be managed by Dechra’s international business, and reported within EU Pharmaceuticals.

The majority of the existing management team will remain with the business and will continue the day-to-day management of the business.

A project management team comprising local contract employees and existing Dechra staff will support the integration workstreams over the coming months as Dechra standards are applied throughout the company.

Dechra’s chief executive, Ian Page, said: “We are delighted to acquire the Venco business, and to be able to establish a footprint in the rapidly-expanding South American markets, with a broad portfolio of animal health products.

“Whilst the Venco business is performing and growing well, like the Brovel acquisition in 2016, we will invest to expand and further upgrade the business over the next two to three years to create increased value to Dechra and its stakeholders.”

In September Dechra saw its underlying profits increase by almost a quarter to £99.2m.

The which had acquired AST Farma and Le Vet in the Netherlands and RxVet in New Zealand, issued its preliminary results for the year which revealed that Dechra had revenue growth of 13.9% to £407.1m, while underlying operating profit increased by 24.% to £99.2m.

Earlier this month, on October 8, Dechra revealed it had also acquired New Zealand-headquartered Caledonian Holdings for £4.4m.

The firm said Caledonian’s range of proprietary equine drugs would enhance its existing portfolio. Caledonian’s revenue in the year to June 30, 2017 was £1.8m.

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