Abbott Laboratories chairman and CEO Miles White has said that valuations for pharma companies in emerging markets are a bit too steep for his tastes right now.
On the April 20 earnings call, White said the drugmaker faces paying 25 to 30 times earnings before interest, taxes depreciation and amortization (EBITDA) for a potential buy in emerging markets, where he noted Abbott is “dedicated to operate.”
White explained: “So we have sidelined [emerging market M&A] to a degree. I think we can be selective about given markets. But we’ve sidelined that while we put our emphasis and focus on other areas of Abbott’s business in terms of what we’re looking at, or what we’re interested in.”
While noting that expansion for established pharmaceuticals remains a priority for the company, White said the current emphasis is “to look at opportunities in devices and in diagnostics […] those remain of interest to us.”
Abbott has taken two big bets in emerging markets in the past few years, buying Veropharm in Russia and CFR Pharmaceuticals in Chile in 2014, in deals the expanded its emerging market footprint following the split of the company that created the pharmaceuticals-focused AbbVie.
The purchases established it as a major branded generics player in both markets, and on the fourth quarter earnings call in January the drugmaker suggested it was looking for more “opportunistic” plays in emerging markets.
White also gave a bit of color on China, where he said concerns over slowing growth may be overdone.
“The world wrings its hands about slowing growth rates in China [even though] China’s growth was 6.5%–and I think if any other country in the world was growing at 6.5%, we’d all be doing cartwheels and investing heavily. We wring our hands when a country as large as China slows to 6.5%. Even if China were at 5%, I’d think it was pretty attractive.”
Abbott posted a revenue fall of 0.2% this quarter, while operational revenue, which factors out currency changes, increased 5.1%.
By EJ Lane
Source: Fierce Pharma
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