Alliance Pharma buys expanded rights to Syntometrine from Novartis

UK specialty drugmaker Alliance Pharma (AIM: APH) says it has acquired all existing rights to Syntometrine (oxytocin and ergometrine) from Swiss pharma major Novartis (NVN: VX) for a consideration of $11.5 million. Shares of Alliance, which already owns the UK rights to Syntometrine, an obstetric drug used in the final stage of labor, rose 2.4% to 37.38 pence on the news.

Novartis and its affiliates have been selling Syntometrine in a number of countries worldwide including Australia, South Africa, Malaysia and New Zealand. In the 12 months to March 2013 the total sales of Syntometrine by the Novartis group were $3.2 million and the gross margin generated was $2.8 million. Alliance expects to have annual distribution and operating costs of about £500,000 ($758,000) associated with these new territories. Last year, the UK firm reported sales of £44.9 million in total.

The $11.5 million consideration is being funded from existing cash and bank facilities, including a £3.5 million drawdown from the group’s £30 million acquisition facilities. This leaves £10.0 million of the facilities available to fund further acquisitions. In addition to the Syntometrine rights, Alliance will be acquiring inventory which is expected to have a value of about $300,000.