New York -- CVS Caremark is reportedly looking to expand outside of the United States by acquiring Onofre, the eighth-largest pharmacy chain in Brazil, according to published reports.
The Valor Economico newspaper reported that CVS Caremark plans to pay $313 million to acquire an 80% stake in Onofre and will also assume the company's debt.
“We don’t comment on market rumors,” CVS Caremark spokesman Mike DeAngelis told Drug Store News.
According to reports, Onofre, which is controlled by the Arede family, is the eighth-largest drug store chain in Brazil in terms of revenues, posting gross revenue of BR1.2 billion in 2011. Onofre operates 44 stores in Sao Paulo, Rio de Janeiro, Minas Gerais, Espirito Santo and Rio Grande do Sul states.
"According to IMS Health, Brazil's market (as measured by manufacturers' revenues) was $29.9 billion in 2011, and is projected to grow by 12% to 15% through 2016," Pembroke Consulting's Adam Fein noted Friday morning in his blog Drug Channels.
CVS Caremark has stated that it plans to continue to increase the number of stores by 2% to 3% each year, taking share from rivals, but some industry observers have been particularly curious about the likelihood of international expansion, especially in light of Walgreens’ recent merger with Boots Alliance in the U.K.
“Management discussed its thoughts on international expansion at several of the investor meetings, saying that retail pharmacy would work in some places like South America where governments do not set pharmaceutical prices. They viewed the PBM model as much tougher to export,” stated Barclays Capital analyst Meredith Adler in a recent research note. “If CVS takes any steps to grow outside the U.S., however, it will move very slowly and carefully to mitigate the risks; organic growth or small acquisitions are the preferred approach.”