OREANDA-NEWS. January 27, 2011. The Russian pharmaceutical company Pharmsynthez controlled by an Estonian company has acquired the Estonian pharmaceuticals producer Kevelt that expects to produce close to eight million euros' worth of a new cancer drug, Virexxa, for the European Union market in 2015.

Pharmsynthez produces medicines and active pharmaceutical ingredients in one of Russia's most modern research and production facilities built in cooperation with St. Petersburg researchers and the German technology group Linde AG which meets EU requirements, Erik Haavamae, member of the board of the holding company AS Ephag that controls the Russian company, told BNS. Its product portfolio at present includes well-known brands like Sehydrin, Neovir, Pencrofton and Fenazid used in oncology and gynecology and treatment of immunodeficiencies and tuberculosis.

"Pharmsynthez sees in the Estonian drug maker Kevelt an opportunity to expand to foreign markets," Haavamae said. The largest private shareholder and chairman of the board of directors of Pharmsynthez, Dmitry Genkin, told Russian news agency Interfax last week that the acquisition of Kevelt will open up direct access to European pharmaceutical markets adding that the transaction fully corresponds to Pharmsynthez's development strategy. Interfax said the production of the drug Virexxa will take place at Kevelt based at the Tallinn technology park Tehnopol.

Chemists Nigulas Samel and Ivar Jarving have for years been the driving force behind Kevelt that started manufacturing pharmaceuticals in 1996. Haavamae said the pair will remain at the helm also under Pharmsynthez. Kevelt produces at present preparations such as Prostenoon Gel for inducing labor, the glaucoma drug Glaumax, pure biochemicals for research, and freezing solutions and systems of stem and cord blood cells.

Last fall Pharmsynthez had its shares listed on the MICEX exchange in Moscow, raising 528 million roubles in the initial offering which Haavamae said it intends to use to expand its sales network, buy bio-pharmaceutical companies abroad, increase production capacity and develop innovative drugs.

The company has seven novel pharmaceuticals in the pipeline of which Virexxa is one of the most promising in terms of sales after the multiple sclerosis drug MyeloXEN. Virexxa, which is at present in the second phase of clinical trials, is expected to generate sales of 207 million roubles on the EU market in 2015. Haavamae said Virexxa has been categorized as an Orphan Drug which makes for a more cost-effective phase of clinical trials and allows the medication to be registered on different markets.

Pharmsynthez expects its sales to increase to 350 million roubles by 2012 and reach 405 million roubles by 2013. Last year it probably surpassed sales and profit forecasts which were 271.6 million roubles and 28 million roubles, respectively. In 2009 the company's sales were 228.4 million roubles, up by 15.7 percent year-on-year.

Kevelt meanwhile saw sales nearly triple to 15.7 million kroons (EUR 1 mln) in 2009 compared to 2008 and its profit was slightly below one million kroons.

Ephag owns 69.3 percent of Pharmsynthez. The holding company in turn is 75 percent owned by Amber Trust II, a fund set up to invest in the Baltic states and Russia that manages assets worth 150 million euros.