Galen buys Sarafem drug from Eli Lilly for $295 mln - ( via NewsPoints Desk)

By Christopher Elser
SOURCE: [Bloomberg]

London, Dec. 9 (Bloomberg) -- Galen Holdings Plc, Northern Ireland's largest drugmaker, will pay $295 million for Eli Lilly & Co.'s Sarafem, a treatment for a severe form of premenstrual syndrome.

Lilly will keep making the premenstrual dysphoric disorder medicine for three years and its sales force will help market the drug until the middle of 2003, Galen Chairman John King said. Sarafem, a repackaged version of Lilly's anti-depressant Prozac, was introduced in 2000 and had sales of $85 million last year.

Galen is expanding its offerings for women's health care as it prepares to sell an intravaginal ring for estrogen replacement in the U.S. Although cheap copycat versions of Prozac are available, Sarafem is protected from generics until 2007, King said in an interview. Sarafem is prescribed by gynecologists, who are less likely to use generic Prozac instead, analysts said.

"Generic erosion, which is illegal, is thought to be modest, and underlying prescriptions are growing,'' Merrill Lynch analyst James Culverwell said in a note to clients. "Sarafem fits well with Galen, as over half of Sarafem prescriptions are made by obstetrician-gynecologists, where Galen has a specialist sales force.''
Culverwell raised his 2003 earnings-per-share estimates for Galen to 40p from 34.3p and for 2004 to 52p from 42.1p.

Shares of Craigavon, Northern Ireland-based Galen rose 38.5 pence, or 7.8 percent, to 533.5p as of the close of trading in London.

Lehman Brothers analysts expect it to have peak sales of $250 million by 2008.

Galen expects to get approval for its IVR around January, King said, and will expand its 220-person U.S. sales force by 60 people. Last year, it bought a Bristol-Myers Squibb Co. estrogen replacement drug.

ABN Amro advised Galen on the Sarafem purchase, King said.

Copyright, Bloomberg L.P.

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