SÃO PAULO, Brazil â€" Valiant Capital Management, a San Francisco-based hedge fund started by Chris Hansen, and Aberdare Ventures have jointly acquired a 45 percent stake in a pharmacy benefits company, ePharma.
The deal was a signal that despite Brazil’s current economic woes and looming inflation, health care here remains an attractive industry for investors.
Even though growth has slowed and inflation is looming in Brazil, health care remains a strong sector. In February, CVS Caremark said it had acquired Drogaria Onofre, a Brazilian drug store chain, and last year UnitedHealth Group acquired Amil Participacoes, an insurer and hospital operator.
EPharma, founded in 1999, has sought to tap into the Brazilian equivalent of pharmacy benefit management firms in the United States. EPharma serves as an intermediary between health insurance companies, employers and pharmaceutical companies. Its customers include Motorola, Petrobras, Unilever and ArcelorMittal.
The value of the Valiant and Aberdare investment is an estimated 169 million reais ($74.6 million). EPharma’s chief executive, Luiz Carlos Silveira Monteiro, said the purchase price was about 13 times ePharma’s expected earnings before interest, taxes, depreciation and amortization. The investment was a combination of primary and secondary transactions.
A pharmacy company, Pague Menos, still holds 26.21 percent of total shares after the new investment. Until now it had been the controlling shareholder. Mr. Silveira Monteiro now holds 10 percent.
Valiant, which led the financing round, and Aberdare were drawn to ePharma because of the large network it had with Brazilian pharmacy companies, according to a person briefed on the negotiations. Several of them were ePharma shareholders in its early years. This person, who asked to be unnamed because the talks were confidential, said that this new investment was intended to make ePharma less beholden to specific pharmacies and thereby providing greater growth potential.
In Brazil, pharmacy benefit managers have about 2 million members according to Vitor Paschoal, an analyst with Itau BBA. But there are expectations that the sector will grow.
Late last year Brazil’s National Health Insurance Agency, the main regulatory body, started allowing private insurance companies to offer separately priced prescription drug plans and offered them financial incentives to do so. In Brazil, private health plans do not typically include prescription drugs.
“This was the first sign that they will give more incentives in the future,†Mr. Paschoal said. “They want to make it happen.â€
A second promising sign for sector in Brazil was UnitedHealth Group’s purchase of Amil Participacoes. Mr. Paschoal says that, “United knows how to operate P.B.M.’s and they could bring the knowledge to Brazil.â€
EPharma’s main competitors here are Orizon, Vidalink and Funcionalcard.
