BUSINESS REPORT NATIONAL 06 Jun 2006 Page 4

Eli Lilly sells unit to Batswacli in first BEE deall by drug giant


Durban In the first black economic empowerment (BEE) deal by a multinational pharmaceutical manufacturer, Eli Lilly yesterday sold its entire insulin business unit to Batswadi Pharmaceuticals.

Jeff Ringer, Eli Lilly South Africas chief executive, said Batswadi had bought the insulin unit, valued at R66.5 mil~ lion, for an undisclosed market-related sum.

Jeffrey Ndumo, the director of empowerment partnerships at the department of trade and industry said the deal was an important development in the pharmaceutical industry.

The deal is of particular importance in light of the pending health charter being negotiated between the public and private sectors.

After an initial draft charter was released. multinationals put forward the option of replacement offerings in place of a 25 percent equity stake. Multinationals cannot offer equity stakes to empowerment shareholders since they are global companies, usually run from international headquarters.

The terms of the sale include a 10-year agreement with Eli Lilly, which will exclusively supply Batswadi with insulin products to be distributed throughout South Africa.

Christopher Whitfield, Batswadis chief executive, said the deal would swell employee numbers from 27 to 45 and the insulin division would make a significant contribution to the companys projected turnover of R62 million for the current financial year Eli Lillys insulin brands are Humulin, which is human insulin; and Humalog, which is used to quickly reduce blood sugar levels.

The two products were previously distributed in South Africa by International Healthcare Distributors and have an established presence of more than 20 years and 10 years in the country, respectively.

Combined sales for the products in 2005 were about R57 million.

Whiffield is Batswadis top shareholder (with 40 percent), followed by Angel Investors (with 29 percent) and the Disability Empowerment Concerns Trust (with 20 percent).

Black female employees own 6 percent and non-executive directors own 5 percent.

The company was established five months ago and will focus on pharmaceuticals, biotechnology, clinical research and consumer health.

Eli Lillys global sales for the first quarter were $3.7 billion (R24.5 billion), 6 percent higher than the same period last year.