Online Extra: No. 23: Actavis Group
Sales: €452 million
In the world of generic pharmaceuticals, Actavis is always racing the clock. The Reykjavik-based company tries to be first in line with a generic substitute when a drug patent expires. With more than 400 products in development, it's part of a global wave of generic-drug makers that are grabbing market share from brand-name pharmaceuticals and driving down the cost of prescription drugs.
Like its much bigger competitors, such as Israel's Teva Pharmaceutical Industries (TEVA ), Actavis is expanding its sales through acquisitions, a strategy that yielded a 43% jump in 2004 sales, to €452 million, generating profits of €78.5 million. This year alone, the company has inked €500 million in deals, picking up assets in Bulgaria, the Czech Republic, Hungary, Slovakia, India, and the U.S. Sales are on track to hit €570 million in 2005, a 26% increase.
Thanks to the buying binge, Actavis has manufacturing, research, and sales operations in 28 countries on five continents. It's the market leader in generics in Iceland and Malta and among the top 10 in many Eastern European countries.
"If you look at the main strength of the company today, that would be the broad geographic reach," says Chief Executive Officer Robert Wessman.
Actavis was formed in 1956 under the name Pharmaco as a partnership among seven pharmacists to distribute and sell brand-name drugs in Iceland. The switch to generics came in 1999, with the acquisition of a tiny Bulgarian generics maker. In 2002, Pharmaco merged with Delta, another Icelandic drugmaker, to create Actavis -- which now ranks as one of Iceland's largest companies.
One of Actavis' main production centers is in Malta, where manufacturing costs are 50% lower than in Iceland. Though Actavis covers all therapeutic areas, its biggest moneymakers are the antibacterial drug ciprofloxacin and cardiovascular drugs such as ramipril.
To stay competitive, Actavis will have to crack the U.S., which accounts for €15 billion of the €38 billion global generics market. Since purchasing Amide Pharmaceutical, based in Little Falls, N.J., for €411 million earlier this year, Actavis predicts that 20% of its sales will now come from the U.S., while its European share holds steady.
"Their growth potential depends heavily on how they do in the U.S.," says Heraldur Yngvi Petursson, analyst at Kaupthing Bank in Iceland. Given that big-name patents from Pfizer (PFE ), Merck (MRK ), and others are set to expire in the next five years, Actavis will have plenty of opportunities.