Fagron announces the acquisition of Gallipot in the US

Mon, 05/10/2010
Fagron is ready to roll out its successful strategy

Fagron today announced  that it has entered into a definitive agreement to acquire the US company Gallipot Inc., a leading supplier of raw materials for pharmaceutical compounding to pharmacies in the US. It is anticipated that the transaction will close at the end of May 2010. Gallipot has grown strongly in recent years, generating a turnover of about US$ 12.5 million (approximately € 9.8 million) and an EBITDA margin in line with that of Fagron. Gallipot will be consolidated from 1 April and will contribute to Fagron’s earnings per share in 2010.

Ger van Jeveren, founder and CEO of Fagron: “In only one decade Fagron grew from a local player to the European market leader and is now taking the role as the global consolidator in the fast growing niche market of pharmaceutical compounding. In the past year Fagron further optimized operational excellence and prepared the internal organization for the expansion of the proven and profitable strategy of Fagron to other continents. We are therefore very pleased with this first acquisition outside Europe. The acquisition of Gallipot gives Fagron a strong entry into the US market and forms an ideal platform for rolling out the Fagron strategy of revitalizing pharmaceutical compounding and profiting from the fast-growing need for tailormade medication. A program to make the best possible use of the scale benefits and introduce

Fagron’s broader product range in the US through Gallipot will be launched immediately. We are very pleased with the confidence expressed by Gallipot’s former owners, Barbara and Michael Jones, and senior management to support the Fagron strategy, as well as their commitment to further contribute to the development of Gallipot.”

Michael Jones, President of Gallipot: “Barb and I are convinced that Gallipot is a perfect match for Fagron, which is a leader in everything to do with pharmaceutical compounding and has built an impressive track record in recent years in Europe. Since its formation in 1979, Gallipot has built a solid reputation in the US for the conditioning and sale of pharmaceutical raw materials, and the sale of creams, ointments and equipment for pharmaceutical compounding to pharmacists. The acquisition offers both Gallipot and Fagron promising opportunities for the future.”

Gallipot’s production facilities and laboratories, which are approved by the Food and Drug Administration (FDA), and its central warehouse are located in St. Paul, Minnesota. Gallipot also has a facility in Scottsdale, Arizona, to provide optimal services for clients in the western US. Despite the global economic crisis, the market for pharmaceutical compounding in the US has shown strong growth in recent years, a trend that is expected to continue in the coming years. The strong growth is attributable to increasing demand for tailor-made medication and the continued development of new and effective compounded applications. The majority of prescription pharmaceutical compounds in the US are covered by medical insurance.

Fagron aims to further strengthen its market leadership through robust organic growth and a focused buy-and-build strategy. In Europe, the emphasis will lie on acquisitions in existing markets and in Central and Eastern Europe and Scandinavia. Outside Europe, Fagron will further look for acquisition possibilities to strengthen its position in the US and the rest of the world.