Watson announced yesterday that it has invested $30m to take a stake in moksha8, a PE-backed pharmaceutical company based in Sao Paolo, Brazil. It has also committed to investing a further $20m, contingent on moksha8 being able to make certain specified product acquisitions over the next year.
The point of this investment is to give Watson a route to market for its branded products, including the innovative ones that it is developing in the US. Although Watson already has a Brazilian affiliate, this sells only unbranded generics, so it intends to continue to operate this in parallel with moksha8. The new deal should also give Watson access to the Mexican market, where it currently lacks any presence.
Moksha8 was set up in 2006 by Simba Gill, who remains the CEO. He started out as a research scientist at Celltech in the UK, but has since worked for several big pharma companies, created a number of spin-out companies and become a Venture Partner at the PE firm TPG, which is now one of the shareholders of moksha8. His team is an international one (but mostly British and American) and has a lot of experience in the pharma field. In 2008, moksha8 signed deals with Roche and Pfizer to provide it with an initial portfolio of 20 products to market in Brazil, giving it instant turnover of around $80m. This was followed by a second Roche deal, in 2009, that added a further $140m of product sales in Brazil and Mexico.
As far as we can see, there is little downside for Watson in this deal. Although moksha8 doesn’t have any background in generics, it should be able to do an effective job of selling Watson’s brands. It also looks set to expand its presence across the whole Latin American region, taking Watson with it. The price that Watson is paying is fairly low, which is important given that big pharma has been snapping up LatAm assets of late, taking valuations to a higher level than Watson is likely to be comfortable with. This therefore looks like a smart way to build up in Latin America and simultaneously create a platform for the women’s health drugs that Watson is developing.
Posted on 5th October 2010