By THE AFRICA BAZAAR Staff Writer
June 3, 2014
After its rather muted debut on JSE over a week ago, Ascendis Health Limited is not waiting for its share price to double or increase before making a strategic move in the South African healthcare market by swiftly scooping up a medical device specialist company, Surgical Innovations, through acquisition.
The new deal will allow Ascendis Health, which makes human and animal pharmaceutical and consumer products, to embark on full speed on its growth strategy as it focus on increasing its presence and market shares in South African pharmaceutical sector through acquisitive growth.
“The acquisition of Surgical Innovations is the latest in our targeted growth strategy and brings our total investment in the last 2 years to over R 1.6 billion, delivering on our deliberate strategy of combining mature, well managed, resilient and health brands with exciting growth potential in South Africa, as well as globally,” said Karsten Wellner, Ascendis Health’s chief executive officer. “We are excited about the addition as it reflects the kind of well known brands that we are currently evaluating via a strong deal pipeline, which is allowing us to develop our market position and become a leading player in the local and international health and care sector.”
Ascendis Health plans to integrate Surgical Innovations as an essential component into its Pharma-Med Division and use it as a platform for further acquisitive and organic growth for high value-add specialized medical devices.
Prior to its debut on JSE, Ascendis Health has sold 41.2 shares in a private placement to raise $44 million (450 million rand) in a share sale that will help fund acquisitions.
The purchase consideration includes three earn out payments with certain growth targets over the next three years. All of the top and middle management including the ongoing support from the key overseas principals have been secured, the company said.
The company expects to leverage its existing platforms in the market to help Surgical Innovations become a leading provider of medical devices throughout South Africa, to both private and government hospitals through strengthening its presence, increased market penetration in current specialty areas, adding new product lines as well as considered further potential strategic acquisitions.
As the healthcare sector in Africa becomes very competitive, high-tech medical and other surgical equipments product makers are increasing being sought out by domestic and international investors hunting for the best deal.
Analysts said some investors see it as an alternative to the pharmaceutical market.
Part of its appeals is meeting the needs of surgeons and the positioning and exclusive access to service hospitals, clinics and medical centers.
It is also one of the fastest growing areas of the sector as hospitals, clinics and medical centers across. Africa invest in modernizing their facilities.
Surgical devices makers and distributors such as Surgical Innovations, which has an annual growth in revenue of around 20 percent over the last three years, often holds exclusive access to key agencies in the surgical and other medical equipments, which further enhances their ongoing positioning to service hospitals, clinics and government tenders.
Ascendis Health is the eight-health sector company to list on the JSE this year.
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