Red-Hot Recordati Spawns Four More Drug Billionaires in ItalyBy
Italy’s drug companies mint eight billionaires in three years
Recordati shares have surged 54 percent in the past 12 months
Recordati SpA has created the newest family of Italian pharmaceutical billionaires.
The drugmaker’s shares have surged 53.3 percent in the past year, giving Chief Executive Officer Andrea Recordati, his siblings Alberto and Cristina, and their sister-in-law Hillary Merkus each a net worth of $1.1 billion, according to the Bloomberg Billionaires Index. The family controls 51.3 percent of Recordati through Milan-based holding company Fimei SpA.
The business, started by the siblings’ grandfather in 1926, has been the focus of takeover talk, fueling the gains. The Recordatis are the latest family of billionaires to emerge from an Italian drug company, the nation’s best performing industry for the past six years.
The company declined to comment on the family’s wealth.
The Recordatis join Luigi Rovati, founder of Rottapharm Madaus, and Alberto and Paolo Chiesi, the septuagenarian brothers behind Parma-based Chiesi Farmaceutici SpA, who were identified as billionaires in November 2014 after Rovati sold the company run by his two sons to Sweden’s Meda AB for 2.3 billion euros ($2.9 billion). Mauro Ajani was identified as a billionaire four months earlier after his Cosmo Pharmaceuticals rose almost 300 percent in two years.
The strength of Italy’s pharmaceutical industry has been a bright spot in an economy hamstrung by heavy debt, high unemployment and tepid growth. Italian drugmakers boosted output by 13 percent and exports by 52 percent from 2010 through 2016, more than any other sector, according to the National Institute of Statistics. Growth averaged 3 percent a year from 2003 to 2013, according to a 2014 report from Bain & Company Inc. and trade group Farmindustria, compared with an average 0.23 percent decline in gross domestic product.
Recordati’s revenue rose 10.1 percent and net income jumped 19.4 percent last year, according to company’s 2016 annual report. The family, which listed the business on the Italian Stock Exchange in 1984, began “informally looking” at strategic options last year, including a possible sale of the business to Chinese buyers, Bloomberg reported in August. Its market value has climbed 16 percent to 7.1 billion euros since then.
“The business keeps on growing due to their strategy and the lack of competition on their M&A targets and rare diseases treatments,” said Pierre Corby, pharmaceutical and biotechnology analyst with Paris-based Oddo & Cie.
Giovanni Recordati founded the business out of a family apothecary dating back to the 19th Century. He created Laboratorio Farmacologico Reggiano, the predecessor to Recordati SpA, in the northern city of Correggio Emilia, in 1926. Giovanni died in 1952 and left the company to his son, Arrigo, who moved it to Milan a year later and began expanding research-and-development, product lines and access to markets outside of Italy, which today make up 79.4 percent of sales, according to the 2016 annual report.
Arrigo died in 1999, bequeathing the business to his four children and putting management in the hands of his son Giovanni, who died last year, leaving his share to his wife.
Three of Recordati’s current products date back to the family apothecary, including an anti-spasm intestinal drug created in 1927, a laxative and colagenic from 1930, and Tefamin, a heart tonic, diuretic and blood-pressure-reducing agent devised in 1935. The company focuses its research and development efforts on treatments for rare diseases.
“Success lies in being proactive and consistent with your business, and maintaining flexibility,” Giovanni Recordati said in an April 2012 interview with PMLiVE. “It is as straightforward as that.”
— With assistance by Chiara Remondini