Concerns Around Medeva Acquisition

Analysts at Morgan Stanley have aired their concerns over Medeva's agreement to acquire the Rochester, USA, facility of Fisons from Rhone-Poulenc Rorer (Marketletter June 10). Their concerns are twofold. First, Medeva has refused to quantify the sales growth of the acquired products for the first four months of the year, and the second is the size of the restructuring provision, which is L65 million ($99.7 million).

One of the products that Medeva picks up in the deal is Tussionex (hydrocodone phenyltoloxamine), a severe cough/cold remedy which, as a growth product gained with the acquisition of Pennwalt in the late 1980s, failed to deliver for Fisons. The analysts suspect that the momentum that Tussionex saw in 1995 has not continued, and say that IMS audit data show a modest decline in prescriptions.

They also point out that prescription growth of another product, Ionamin (phentermine), used in the treatment of obesity, has been impressive this year, at over 250%. However, competition is around the corner with new products coming to the market (see page 21).