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12:00 AM
 | 
Feb 08, 2010
 |  BioCentury  |  Strategy

Footprint for growth

Investors often worry that when companies add low-margin products to a high-margin portfolio, earnings will suffer. Cephalon Inc. Chairman and CEO Frank Baldino says the company's proposed acquisition of generics company Mepha AG should allow the biotech to continue to deliver EPS growth at its historical rate, while also giving it the geographic footprint to compete for partnering deals.

"Cephalon has been generating double-digit bottom line growth over the years, and our European business, which included branded generics, helped to drive that growth. Mepha is more of the same in that respect," Baldino told BioCentury.

"This deal brings us a bigger top line and allows us to exceed $800 million in sales in Europe," he added.

Last week, Cephalon proposed to acquire Mepha for CHF622.5 million ($587.9 million) in cash.

Mepha's portfolio of more than 120 generics and branded generics recorded 2009 sales of CHF400 million ($377.8 million). The company has a 38% market share in Switzerland, making it the largest generics provider in that country. Mepha also has a commercial presence in Portugal, the Ukraine, Poland, the Baltic region, Africa and the Middle East.

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