OPKO to Buy Brazilian Company - Analyst Blog
Within 2 weeks of the purchase of CLIA laboratory, OPKO Health, Inc. ( OPK ) has come up with yet another acquisition deal. This time, the Miami based biopharmaceutical and Diagnostics company is planning to expand in Brazil, the largest growth market of Latin America. OPKO stated that it has entered into a definitive agreement to acquire Sao Paulo based Silcon Comércio, Importacao E Exportacao de Produtos Farmaceuticos e Cosmeticos Ltda. The financial terms of this deal were not disclosed.
Although the enrollment of a new business in a new region is complex and time consuming, many companies adopt this short-cut method of acquisition. This immediately allows the company to market its product through the acquired company directly from day one. Apart from providing these cross-marketing opportunities for OPKO's products, the acquisition of Silcon will strengthen OPKO's diagnostic business as this will enable the company get the permits to commercialize its latest prostate cancer test 4KScore in Brazil as a reference laboratory test. OPKO believes that the successful completion of this deal will help the company expand faster in the growing Latin American market and will also complement the business activities of the units in Chile and Mexico.
Over the past few quarters, OPKO has been focusing on exploring opportunities to acquire complementary pharmaceuticals, compounds, technologies, and businesses. On December 18, 2012, OPKO acquired Prost-Data, Inc., which is doing business as OURLab, a Nashville-based CLIA ( Clinical Laboratory Improvement Amendments) laboratory with 18 phlebotomy sites throughout the U.S. and an experienced national sales force calling primarily on urologists. OPKO expects OURLab to provide the company with a commercial platform to support the U.S. commercial launch of its panel of kallikrein biomarkers and 4Kscore.
Earlier in August 2012, the company acquired Farmadiet, a Spanish company engaged in the development, manufacture, marketing, and sale of pharmaceutical, nutraceutical, and veterinary products in Europe. OPKO, with this acquisition, entered in the European Union. The acquisition of the Chilean pharmaceutical company ALS in April was another important event.
We believe that OPKO's acquisition and expansion strategy bodes well with the company's strong cash profile ($23.4 million of cash and cash equivalents at the end of September 2012). However, the company performs in a fiercely competitive platform with players like Merck & Co. Inc. ( MRK ).The stock retains a Zacks #4 Rank (Sell in the short term).
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