Guerbet sees Mallinckrodt deal as key to growth

2015 02 27 13 00 49 203 Hands Shaking V2 200

Contrast agent manufacturer Guerbet this week closed its acquisition of the contrast division of Mallinckrodt. The move vaults Guerbet into position as a major player in the U.S. contrast market and is a key stepping stone in the French company's plan for growth.

Guerbet paid $270 million U.S. (250 million euros) for Mallinckrodt's Contrast Media and Delivery Systems (CMDS) division. The division markets products such as the Optiray CT and Optimark MRI contrast products, as well as contrast injection systems.

Guerbet has a long pedigree in the contrast media industry, having been founded in France some 90 years ago. But the company has a small footprint in the lucrative U.S. market: In the past several years it has introduced the Dotarem MRI contrast product and the Lipiodol agent for lymphography, hysterosalpingography, and imaging tumors in adults with known hepatocellular carcinoma (HCC), but neither of these products has achieved broad market penetration.

Guerbet CEO Yves L'Epine.Guerbet CEO Yves L'Epine.

The Mallinckrodt deal gives Guerbet the opportunity to change that, while also helping Guerbet achieve the market size needed to more effectively compete with other contrast companies, according to Yves L'Epine, CEO of Guerbet.

"The U.S. is the first worldwide market and the pioneering land for innovation, which was a key factor as we considered this acquisition," L'Epine told "We have made good progress over the past few years, but given the importance of the U.S., we were very interested in anything that could accelerate our presence in this market."

L'Epine sees Guerbet and Mallinckrodt's contrast division as highly complementary businesses. Guerbet will be able to use the CMDS distribution network in the U.S. to sell its products, but it will also benefit from the division's strong presence in areas such as Russia, South Africa, and Australia, where Guerbet is not active. The combined company will have a market share of at least 10% in every geographic region where it is active, L'Epine said.

Beyond geography, the companies have specialized in different product areas, with Guerbet stronger in MRI contrast and CMDS providing a bigger position in CT and cath lab contrast, as well as injection systems. In addition, Guerbet has more expertise in contrast sold in prefilled bags, while CMDS brings experience in prefilled syringes.

Guerbet also expects to achieve synergies by transferring expertise developed at individual sites to other facilities in Guerbet's network, and by pushing quality benchmarks across its manufacturing network. For example, Guerbet will be able to use the expertise of personnel at the CMDS facility in Cincinnati to develop prefilled syringes for the Dotarem MRI agent, L'Epine said.

On a personnel level, Guerbet's existing management team will oversee the newly acquired business, with the general manager of Guerbet U.S.A., Massimo Carrara, continuing to run the sales and marketing operations in the country. CMDS managers in different business units, such as manufacturing, will report through Guerbet's existing management structure.

The CMDS business has experienced revenue declines in the past several years, a trend that Guerbet expects to reverse by investing in a business that it believes was undercapitalized under Mallinckrodt's ownership.

One headache the company will not have to worry about is Mallinckrodt's technetium-99m generator business, which was not included in the deal. The business has seen turmoil recently due to occasional supply shortages of molybdenum, the raw material for the radioisotope.

What's next for Guerbet? The company has set a revenue target of $850 million U.S. (800 million euros) for the combined company. And the Mallinckrodt acquisition may not be the last deal as Guerbet continues to look for ways to expand.

"We felt we were not big enough, and with the addition of CMDS we reach this critical mass," L'Epine said. "This won't be the last opportunity, if other [deals] support our strategy to further grow."

Page 1 of 607
Next Page