Information on the Target

The Riverside Company, a prominent global investment firm focused on the smaller segment of the middle market, has announced that A.forall, a portfolio company of its European fund, has signed a definitive agreement to divest its Retail & Hospital (R&H) business unit to Abacus Medicine. Abacus Medicine specializes in the parallel import and distribution of pharmaceuticals across Europe, and the transaction is set to finalize in the second half of the year.

A.forall, previously known as Alter Pharma, is a global specialty pharmaceutical group headquartered in Belgium. Since Riverside's investment in December 2017, A.forall has expanded its services and product offerings significantly. The recent acquisition of Eco Pharma Supply in April 2022 has enhanced its regulatory compliance, market expertise, and extensive logistics network, solidifying its position in the industry.

Industry Overview in Belgium

The pharmaceutical industry in Belgium is robust and highly regulated, characterized by a strong emphasis on innovation and compliance. Belgium serves as a strategic hub for pharmaceuticals in Europe due to its central location, allowing efficient distribution across the continent. The sector benefits from a well-established regulatory framework that encourages both multinational and local companies to invest and expand their operations.

Parallel importation has become an increasingly important aspect of the Belgian pharmaceutical market. This practice allows for price differences between EU countries to be leveraged, making medications more affordable for consumers. The country's healthcare system, which emphasizes access to medicines, has created a conducive environment for businesses engaged in this sector.

Moreover, the growing demand for generics and affordable medications has led to a surge in parallel imports. The government actively supports initiatives aimed at improving drug accessibility, addressing shortages, and ensuring that healthcare professionals and patients have access to essential medicines. This trend has propelled the growth of firms like A.forall, which focus on bridging gaps in the supply chain.

As the EU continues to adapt its policies toward pharmaceuticals, companies operating in Belgium will need to stay agile and responsive to changes in regulations and market dynamics. The ongoing development of AI and technology in supply chain management is expected to further revolutionize how healthcare products are distributed and delivered to end-users.

The Rationale Behind the Deal

The decision to divest A.forall's R&H business unit is seen as a strategic move to enhance the focus on its generics business. Under Riverside's management, the R&H division expanded from a national player to a multi-country entity with a diversified portfolio of services and products. By selling to Abacus Medicine, A.forall can benefit from the latter's expertise in pharmaceutical distribution, particularly in addressing market shortages.

Additionally, the integration of Abacus Medicine's extensive distribution network will allow for greater efficiency and reach in serving pharmacies and hospitals. This synergy not only aligns with the growth trajectory of A.forall but also ensures that the brand continues to deliver high-quality healthcare products effectively.

Information About the Investor

The Riverside Company is renowned for its commitment to investing in mid-sized businesses with high growth potential. With a focus on providing specialized expertise and a global network, Riverside aims to propel its portfolio companies into new markets successfully. Throughout its investment journey, the firm has established a strong track record in the healthcare sector, as evidenced by this transaction, which represents Riverside's 11th exit in European healthcare and 48th globally.

Riverside's approach emphasizes long-term value creation by supporting companies through challenging market conditions, demonstrating an understanding of the specific needs within the healthcare industry. The firm retains a stake in A.forall’s Generics unit, indicating confidence in its potential for continued growth and expansion.

View of Dealert

Investing in A.forall’s divested Retail & Hospital division appears to be a prudent move for Abacus Medicine, given the complementary benefits both companies bring to the table. The R&H division has established strong relationships with pharmacies, facilitating easy integration into Abacus Medicine’s existing operations. This strategic acquisition could lead to improved market presence and access to a broader range of essential medications.

From an investment perspective, the growing demand for affordable medications and the increasing significance of parallel importation in Belgium places Abacus Medicine in a favorable position. As they leverage A.forall’s existing infrastructure and technology, they can enhance service delivery and product accessibility, which is critical in the current healthcare landscape.

The leadership transition within A.forall also indicates a positive direction for the company, as Steen Vangsgaard's experience in the generics sector will play a crucial role in scaling their operations. His focus on generics aligns well with the industry's trajectory and complements Riverside's strategy of fostering growth in its remaining units.

In summary, this deal symbolizes a strategic alignment of interests in the pharmaceutical sector, promising significant benefits for both parties while continuing to prioritize patient access to affordable and essential medicines.

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