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Mcebo Dlamini appears in court. Picture Credit: Julia Madibogo
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It's no deal for SA's drug giant

By Adele Shevel | Jun 03, 2009 | COMMENTS [ 0 ]

ADCOCK Ingram yesterday withdrew its R2,13billion cash offer to buy Cipla Medpro, which would have provided a portfolio and pipeline of generic drugs to South Africa's second-largest pharmaceutical company.

Cipla India had threatened to cancel its current supply of products to the Cipla Medpro SA if Adcock Ingram bought out Cipla Medpro SA - a move that would have rendered it a no longer a viable transaction. Cipla Medpro SA had also not formally supported the deal.

Adcock, the country's largest over-the-counter pharmaceutical company, is facing competition from cheaper generics and its margins are under pressure.

"It comes across as needing to buy growth," said an analyst.

Jonathan Louw, Adcock Ingram's chief executive, said the company had been as well prepared as it could have been, having worked on the deal for two years, and had raised the finance in a "very difficult market".

"Clearly we are disappointed. No one has challenged us on the strategic rationale - we were waiting for the board to come back and respond and say let's chat about the strategy, fit and price.

"Despite writing to them, Cipla SA has failed to give input on the transaction."

Peter Breitenbach, healthcare programme manager at Frost and Sullivan, said Adcock might have been too bullish, "maybe they misread a few signs, but the deal made sense, though it now appears like a Greek tragedy".


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