OREANDA-NEWS. The country's largest drug maker, Pharmstandard, plans to float a stake of up to 40 percent in London and Moscow, making it the first Russian pharmaceuticals firm to list abroad.

Pharmstandard said it was the fourth-largest drug company operating in Russia by sales volume last year, although an independent researcher said it had grabbed the overall market lead in the early months of 2007.

"Our goal is to strengthen further our position as the leading domestic pharmaceutical company in Russia", general director Igor Krylov said Wednesday.

Krylov added that Pharmstandard's strategy was "promoting our market-leading brands, launching new products, increasing investment in sales and marketing and selectively acquiring additional companies".

Analysts said a lack of listed rivals made it tough to estimate how the market might value Pharmstandard, although Olga Samarets at Prospekt brokerage said that, based on current market multiples, it could be worth $1,4 billion to $1,7 billion.

Sergei Filchenkov at Finam put a "very preliminary" price tag of $1,2 billion to $1,6 billion on Pharmstandard. The planned float follows Pharmstandard's acquisition last year of competitor Masterlek and with it, a product portfolio including antiviral drug Arbidol, the market leader in Russia, where it outsells Pfizer's Viagra anti-impotence treatment, the second most popular drug.  


Commercial drug sales in the country rose by 22 percent in 2006 to $5,2 billion, according to market researchers Pharmexpert, which said Pharmstandard had taken first place in the first two months of this year from Sanofi-Aventis.

"This is a very dynamic company. It has consistently shown annual sales growth of 30-40 percent - faster than the market," said Pharmexpert's head of market research, David Melik-Guseinov.

A banking source familiar with the offering said Pharmstandard would begin a road show April 23, when it will announce a preliminary initial public offering price range. Final pricing should be set by May 4.

Citigroup and UBS are acting as joint global coordinators and bookrunners of the offering of global depositary receipts in London and ordinary shares on Moscow's MICEX and RTS exchanges.

The float would be of existing shares belonging to the company's owners - Viktor Kharitonin, Yegor Kulkov and Millhouse Capital, Roman Abramovich's investment vehicle.

"It is a pure secondary offering - our owners have decided to monetize their investments," said spokeswoman Olga Leschankaya. "The current plan is to sell up to 40 percent," she added, declining to estimate proceeds from the float.

Announcing 2006 results, the company said sales rose 50 percent to 8,52 billion rubles ($324 million) while net profits gained 109 percent to 1,9 billion rubles ($72 million).

Only 8 percent of overall sales were tied to a government drugs reimbursement program. The plan, designed to replace Soviet-style provisions for people on low incomes, has been hit by teething troubles and financial woes.

Melik-Guseinov said Pharmstandard had profited from its commercial focus, but could achieve future growth by moving into the state-funded sector. He cited company plans to become the country's first maker of insulin products to treat diabetics.