CSL's Perreault Sees ‘Smart’ Acquisitions to Boost Growth

  • China is a strategic imperative for the blood products group
  • Company's products may help sufferers currently untreated

CSL Ltd., the Australian maker of blood-derived therapies, sees “smart” acquisitions as a way to spur growth, though the biotech sector has to be more disciplined in its transactions, Chief Executive Officer Paul Perreault said.

“When I think about M&A as part of our strategy, it is really about adding value,” Perreault told a Bloomberg event in Melbourne. “It’s not about bolt-ons. You have to take it somewhere else, in my view. If you cannot add value, you probably shouldn’t be buying it.”

Melbourne-based CSL, whose shares have almost tripled in the past five years, expanded globally in 2003 with the acquisition of the Aventis Behring blood products business from France’s Sanofi. In 2014 it announced it had agreed to pay $275 million for Novartis AG’s influenza vaccines unit.

Perreault, an American who succeeded Brian McNamee as CEO in 2013, said China was a “strategic imperative” for the company as its market opened up to treatments for conditions such as haemophilia. The country has as many as 65,000 sufferers of the bleeding disease, though only about 6,000 are getting treated, which provided “a big opportunity” to expand the sale of treatments, he said.

While China has a long history of public health concerns regarding blood-products that limit opportunities for foreign companies to sell plasma therapies there, the government is starting to recognize the needs of patients with rare disease, Perreault said.

“We have products that can help people in China, but the hard part is finding a way in,” Perreault said. While the company’s recombinant-protein-based medicines may offer a way in, “it will be a while before recombinants may take a big share of the Chinese market.”

CSL shares dropped 0.6 percent to A$99.41 as of 10:09 a.m. in Sydney trading, taking this year’s decline to 5.4 percent and valuing the company at A$45.5 billion ($35 billion).

In January 2013 the company created a new unit, named bioCSL, to encompass its vaccine, pharmaceutical and diagnostics businesses. In March that year Perreault said the company was considering separating the unit, which has since been renamed Sequirus, from the CSL Behring plasma division. That business accounted for more than 90 percent of sales and earnings before interest, tax, depreciation and amortization in the year to July 30, according to data compiled by Bloomberg.

The company won’t seek to diversify away from its core blood-plasma and vaccines business into fashionable areas, like immune therapies for cancer, and it would not rush to spin off the bioCSL unit, Perreault said.

“I did not buy it to spin it out, put it that way,” Perreault said.

The company, formed by the Australian government as the Commonwealth Serum Laboratories during World War I, is the country’s main supplier of snake-bite antidotes and is celebrating its centenary year with an event in Melbourne on April 14.

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