Horizon Capital, regional private equity fund manager, and FMO, the Dutch development bank, announced today their acquisition of a stake in Biofarma, a leading Ukrainian pharmaceutical manufacturer. The capital will be used to construct a modern plant in Kyiv region. The financial details of the transaction were not disclosed.
Biofarma is a top 10 Ukrainian pharmaceutical manufacturer that holds a leadership position in three primary market segments: #1 in plasma protein products; #1 in organic drugs; and #3 in recombinant drugs. Moreover, Biofarma is the only Good Manufacturing Practices (GMP) certified producer of immunoglobulin (plasma protein products) in Ukraine. The company is not only a forerunner in its domestic market, but it also exports to other countries.
The new facility will have state-of-the-art manufacturing lines and quality control laboratory for recombinant and other non-plasma derived drugs portfolio. The plant was designed by Linde (Germany), a global engineering company with extensive experience in the pharmaceutical industry. The new plant meets current regulatory and GMP requirements. With the launch of this facility Biofarma will lead in effective and modern production techniques.
This first significant Western foreign direct investment into the Ukrainian pharmaceutical manufacturer is both a statement of the sector’s promise and a new stimulus for its further development. Biofarma’s market leadership position and the overall industry growth potential were key factors in the investment decision. Over the past five years, the sector has shown an 8% CAGR (2007-2011, in USD terms) based on both import substitution and per capita consumption growth trends. Ukraine per capita pharma consumption is currently just two-thirds that of Russia and less than one third that of Poland.
Oleksandr Makovskiy, CEO of Biofarma, said: “For us, it is a perfect match and we see significant potential in this transaction. We are happy to attract new partners who bring resources and best business practices that will help strengthen and secure Biofarma’s prominent position in the industry.”
This is Horizon Capital’s second investment from Emerging Europe Growth Fund II (EEGF II) this year, following its acquisition of a stake in Ukrainian IT company Ciklum. Natalie Jaresko, Founding Partner and CEO of Horizon Capital, commented on the transaction: “We are proud to be a part of building a modern manufacturing facility which will produce high quality, lifesaving drugs for Ukraine and the region. Biofarma is increasingly focusing strategically on specialty niches. With our combined resources and expertise, we will be actively supporting this strategy, Biofarma’s market leadership and market share growth in this promising industry.”
Idsert Boersma, Manager Private Equity of FMO, said: “The investment in Biofarma is attractive for us since it is a unique opportunity to become the first Western investor into a major Ukrainian pharmaceuticals producer and benefit from the fast-growing market. Biofarma is building a state of the art production plant just outside Kyiv that will offer better quality medicines for an affordable price for the Ukrainian people.”
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