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Drugs

Abbott to Acquire Knoll Pharmaceuticals Division for Approximately $7 Billion

Strategic Insights

— 2 min read

Abbott, a leading US healthcare company, is poised to acquire Knoll, the pharmaceuticals division of German chemicals group BASF, in a move aimed at strengthening its pharmaceutical division. The purchase would bring Abbott several marketed products and greater access to Europe. Despite its significant market capitalization and annual sales, drug sales account for only 30% of Abbott's revenues, ranking the company 13th in the industry. The acquisition would help Abbott improve its pharmaceutical offerings, particularly in the US market, where Knoll's products have underperformed due to a lack of a substantial salesforce.

Key Takeaways:

  • Abbott is acquiring Knoll Pharmaceuticals Division for approximately $7 billion, marking a significant expansion of its pharmaceutical business.
  • The acquisition would bring Abbott several marketed products, including D2E7, an injectable treatment for arthritis, and Meridia, a diet drug.
  • The purchase would provide Abbott with greater access to Europe, a key market for pharmaceutical sales.
  • Knoll's profit margin is about half the industry average, with expected earnings of €220m (approximately $195m) on sales of approximately €2.3bn in 2001.
  • Analysts believe the purchase may be too high, with some expecting the sale to reduce Abbott's 2001 earnings per share by 20 cents or 10%.
  • The acquisition would be a change of strategy for BASF, which had committed to turning Knoll around but ultimately decided to sell the division.
  • Abbott's pharmaceutical sales account for only 30% of the company's revenues, with the remaining 70% comprising diagnostics, hospital products, and nutritional products.

Statistics:

  • $7 billion: approximate purchase price of Knoll Pharmaceuticals Division
  • $80 billion: Abbott's market capitalization
  • $13.5 billion: Abbott's annual sales
  • 30%: share of revenues from pharmaceutical sales
  • 40%: increase in Abbott's shares this year
  • 6.9%: decline in Abbott's shares to $48.25 as of midday yesterday
  • $500m: estimated sales of D2E7, an injectable treatment for arthritis
  • €220m: expected earnings of Knoll in 2001
  • €2.3bn: expected sales of Knoll in 2001
  • 20% or 10%: estimated reduction in Abbott's 2001 earnings per share
  • $7.3 billion: approximate price of the abandoned merger between Abbott and Alza
  • €46.20: BASF share price as of yesterday

Sources:

  • Abbott to buy BASF's Knoll unit for about $7 billion, The Financial Times, [date not specified]
  • Abbott to buy BASF's Knoll unit for about $7 billion, Reuters, [date not specified]
  • Knoll's profit margin is about half the industry average, according to the article.
  • BASF shares closed up €0.30 at €46.20, as reported by David Pilling, Francesco Guerrera, and Tasso Enzweiller.

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