beyondbrics

By Thomas Williams of mergermarket

GlaxoSmithKline’s US$253m cash acquisition of Laboratorios Phoenix, Argentina’s pharmaceutical business, is modest by the industry’s high standards but it is a not an insignificant show of confidence in the troubled South American country’s economy.

Announcing the deal on Thursday, GSK emerging markets president Abbas Hussain said it was “an important step forward in our strategy to grow our business in Latin America” which would bring GSK a plethora of local drug brands including cardiovascular, gastroenterology, metabolic and urology products.

Laboratorios Phoenix , set up 70 years ago and owned bythe Sielecki family, may only be the Argentine pharma market’s number eight but the combination with GSK’s existing operations in the country will make GSK the third pharma company in the country. IMS, the healthcare research company, estimates the Argentine market at $3bn with a growth rate of 22%, the third highest in the emerging economies.

But operating in Argentina is not without its difficulties. The Pharmaceutical Research and Manufacturers of America (PhRMA) has raised concerns over test data protection and patent processing, and trademark and copyright enforcement in certain contexts.

An opposition-controlled congress and presidential elections next year may also make Argentine healthcare systems policies less certain but GSK has clearly decided the benefits of the Laboratorios Phoenix deal outweigh such worries.