AMERSHAM's $61.3 MIL. PURCHASE OF ROCHE's MEDI-PHYSICS

Executive Summary

AMERSHAM's $61.3 MIL. PURCHASE OF ROCHE's MEDI-PHYSICS radiopharmaceutical business will make the British firm the largest radiopharmaceutical company in the world, Amersham said in an Oct. 4 press statement announcing the agreement-in-principle. Amersham currently holds about 10% of the world market for radiopharmaceuticals, with projected fiscal 1990 sales of $35 mil., a spokesperson said. The company expects the Medi-Physics acquisition to boost its share to 25%. Roche will receive $61.25 mil. in cash, stock and debt for Medi-Physics. Specifically, the Nutley, N.J.-based firm will receive Amersham shares "representing approximately 5% of Amersham's enlarged share capital," $30 mil. in Amersham three-year notes and $12 mil. in cash. The companies expect to complete the transaction by the end of calendar 1989. The deal gives British Amersham a U.S. manufacturing base for its radiopharmaceutical operations and an expanded distribution channel through Medi-Physics' 35-person U.S. sales force; Amersham currently has a U.S. detail force of 20. Medi-Physics has production facilities in Tuxedo, New York; South Plainfield, New Jersey; and Arlington Heights, Illinois. The company owns and operates five cyclotrons. Amersham currently owns three cyclotrons; the addition of the Medi-Physics devices will "give Amersham a leading position as a worldwide producer of cyclotron isotopes," the company noted. In calendar 1988, Medi-Physics had unaudited sales of $53.2 mil. and an operating loss of $7.4 mil., Amersham reports. Most of the company's business is in the U.S. "The unaudited net assets at the end of August 1989 were $63.2 mil.," Amersham said. "Medi-Physics has already commenced a reorganization of its business with a view to eliminating losses before completion." Amersham expects the acquisition to have a neutral effect on current fiscal year earnings, and a positive effect in 1990-1991. For the year ended March 30, Amersham reported sales of (BRITISH POUND)180 mil. (pounds sterling) or approximately $288 mil. (based on a conversion rate of $1.60). Amersham Americas' revenues for the year were (BRITISH POUND)41.4 mil., or about $66.2 mil. Roche says it is selling Medi-Physics because it would have required a substantial financial commitment to make the radiopharmaceutical company a major competitor. Had it been successful, Roche's 1988 bid for Sterling would have given Medi-Physics much more critical mass by adding Sterling's hugely successful Omnipaque to the Medi-Physics product stable ("The Pink Sheet" Jan. 11, 1988, p. 6). However, Roche eventually lost a tug-of-war over Sterling to Kodak. Amersham's leading product is Ceretec, a cerebral imaging agent. The product competes against Medi-Physics' flagship product Spectamine. A spokesperson for Amersham said it has not yet been decided how marketing for the two products would be handled.