Sanofi acquires stake in Globalpharma from Dubai Investments

Globalpharma manufactures pharmaceutical products and is registered in more than 14 countries across the Middle East and neighbouring markets, according to the statement.

Globalpharma signed a deal with Sanofi last month to manufacture some of its generic medicines in the UAE. Remy Gabalda / AFP

Sanofi has acquired a majority stake in Globalpharma from Dubai Investments as the French drug maker targets the booming regional pharmaceuticals sector.

The Dubai-listed investment company sold a 66 per cent share in a deal signed yesterday. The total value of the deal was not disclosed, but DI said it received an internal rate of return of 26 per cent over a 10-year period. It will retain the rest of the stake.

“The investment case for Globalpharma was compelling, as it was to operate in a pharmaceutical market that was expected to have uninterrupted growth in the region over the coming years, driven by favourable demographics and increasing GDP per capita,” said Khalid bin Kalban, the managing director and chief executive of DI. “The penetration of generic drugs manufacturing, which has historically been low in the region, is now gradually increasing to European levels.”

Last month, Globalpharma signed a deal with Sanofi to manufacture some of its generic medicines in the UAE.

As global pharmaceutical companies lose their patent protection on drugs, they are looking to generics to boost their revenue.

Moreover, for global health companies, “the approval process for the set-up of a new manufacturing base as well as the distribution process for drugs is quite long drawn in the Gulf, and therefore acquisition of a local company is a faster route to expansion”, said Sanjay Vig, the managing director of the investment bank Alpen Capital Middle East in Dubai.

Sanofi’s net income for the first quarter was €1.08 billion (Dh5.39bn), up from €989 million last year. But its sales of €7.84bn decreased by 2.7 per cent. Of that, emerging-market sales rose by 5.5 per cent to €2.59bn.

The Arabian Gulf health care market is expected to touch US$69.4bn by 2018, growing 12 per cent annually from $39.4bn last year, according to an Alpen Capital report.

Also last month, Abu Dhabi’s Neopharma announced a tie-up with the Pfizer’s Wyeth to manufacture medicines for cardiovascular diseases, women’s health and pain management.

And in April, Julphar announced a five-year licensing agreement with MSD, a unit of US-based Merck, to market products in the UAE, Kuwait, Bahrain, Oman, Qatar and Iraq.

With the sale, the French company will manage Globalpharma, which will manufacture and promote Sanofi’s generics portfolio, including anti-infective, cardiovascular and gastrointestinal products, in the Middle East.

Globalpharma, which was set up in 1998, is registered in 14 countries in the Gulf, Middle East and neighbouring markets. It manufactures antibiotics, cardiovascular medicines, painkillers, food supplements, vitamins, anti-diabetics, respiratory products and anti-allergic drugs.

DI’s shares closed at Dh2.96 yesterday, down 2.95 per cent. While the price was higher than a year ago, that is a fall from its yearly high of Dh4.13 on May 5.

The internal rate of return is 26 per cent over a 10-year period. “It’s a very good rate of return,” said Shailesh Dash, the chief executive of Al Masah Capital Management.

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