Kedrion IPO offers little comfort to depressed markets


A rare event in the life sciences sector is due to take place next week, when Italy’s Kedrion, a manufacturer of blood plasma products, is set to list on Milan’s stock exchange.

Unfortunately for the bankers and advisors who are no doubt desperate for a pick up in corporate activity, the float is unlikely to signal an improvement in sentiment for the beleaguered sector. The company is involved in blood plasma products, which is much lower risk than biotechnology or drug research and, perhaps crucially, it makes a profit.

The only other IPO to get away in Europe this year in the sector was MolMed, a fellow Italian, which raised €50m in March. The gene therapy company can attribute its success where others failed in large part to a “local hero” effect, and the fact that the float was heavily supported by Italian investors, including some of the country’s most powerful families, such as the Berlusconis.

Strong backing

Kedrion also has a strong backing, it is currently owned by the founding Marcucci family, whose ownership will drop to 49% from 60% following the float. They have stated that they are long term investors in the group. If the offer is subscribed and the greenshoe exercised, the free float will be 35% of the share capital.

Hopefully Kedrion will fare better than Talecris, the blood plasma unit spun off from Bayer, which pulled its $1bn IPO at the end of last year, blaming market conditions. Reports have since claimed that its private equity owners are considering selling the company instead.

Kedrion has got further down the path than Talecris, and a price range of €9.5 and €12.5 has been set, with the final price to be notified on July 12. The float is set for July 16.

The IPO will raise between €177m ($278m) and €224m, and the group will be capitalised at €557 to €703m. Assuming a mid range price, that would give the group a market cap of €630m, or $991m.

Peer group

EvaluatePharma’s Peer Group Analyzer shows how the company would fit into similar blood plasma companies. Its nearest peer is probably Germany’s Biotest.

US $ (m) 2007 Revenues  Growth on 2006 2007 EBIT Growth on 2006 Market cap
 Baxter International  11,263  9%  2,289  23%  41,068
 Biotest  448  26%  53  29%  522
 CSL  3,201  24%  868  40%  17,202
 Grifols  964  18%  201  62%  6,629
 Octapharma  1,031  50%  320  109%  PRIVATE
 Kedrion  285  17%  61  53%  *991

* Assumed

Kedrion is listing to raise cash to fund expansion abroad, specifically it wants to buy or set up plasma gathering centres and distribution networks. It currently gathers blood plasma in the US, Germany and Austria, and recently bought a plant in Hungary for €32m.

Further acquisitions are the aim, to achieve greater vertical integration and increase fractional capacity.

Clearly, the likes of Biotest and Kedrion have a long way to go before they can compete with the likes of Baxter, which has a broader portfolio than just blood plasma, or CSL. Still, the Italian group puts its growth in recent years down to growing demand, as well as its own expansion, so growth opportunities are clearly there.

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