MOSCOW Russian drugmaker Pharmstandard has agreed to buy a supplier of ingredients for its flagship anti-viral and anxiety drugs for $590 million, as part of a plan to spin off its over-the-counter (OTC) business.
The plan to purchase Bever Pharmaceutical prompted a sell-off in Pharmstandard's shares when it was first announced in July. Analysts were concerned about a lack of information regarding Bever or a clear reason for the deal.
Moscow-traded shares in Pharmstandard were down 1 percent at 1450 roubles ($49.48) by 1048 ET, a fall of some 25 percent since the deal was first announced.
Pharmstandard said on Tuesday it would pay $542 million in shares and $48 million in cash to buy Bever from Pharmstandard board member Alexander Shuster, who will become Pharmstandard's second-largest shareholder with an 18.7 percent stake.
The deal was initially valued at $630 million. Pharmstandard has said Bever would become part of the OTC unit it plans to spin off and later list on the Moscow Exchange.
With a market value of around $2 billion, Pharmstandard is Russia's biggest drugmaker in a market dominated by foreign pharmaceutical firms.
It said in a statement that the deal aimed to secure the long-term supply of critical pharmaceutical ingredients for its antiviral drug Arbidol and anti-anxiety drug Aphobazolum and to improve profitability after securing lower prices.
In a presentation on its website, Pharmstandard said Bever signed on June 25 a new 20-year contract for the supplies of the ingredients at a fixed price, adding Pharmstandard could have saved $60 million had it been signed in 2012.
The company also said on a conference call it would continue to develop the prescription business as well as sales of third-party drugs after the completion of the proposed OTC spin-off and was open to more acquisition opportunities.
Pharmstandard recently bought Shuster's 5.4 percent stake in Pharmstandard subsidiary Donelle, which has the rights to Aphobazolum, for 121 million roubles, and plans to buyout the remaining 5.47 percent it does not already own from third parties.
(Reporting by Maria Kiselyova; Editing by Tom Pfeiffer and Greg Mahlich)