Bain’s Stada acquisition to bolster Hugel’s European distribution network:Private equity fund (PEF) Bain Capital—Hugel’s majority shareholder—on Aug 18 announcedits acquisition of leading German pharmaceutical firm Stada, whose 2017 sales and operatingprofit are projected at USD2.71b and USD0.35b, respectively. Bain paid USD6.2b, a record fora PEF to buy out a listed German firm. Bain Capital is now mulling the acquisition of Sanofi’sEuropean generics business and merging the unit with Stada, according to mass media reports.    Stada, whose distribution network spans Europe, is Hugel’s sales partner in 10 Europeancountries (including Germany, the UK, and Italy). In Dec 2015, the German firm obtaineddistribution rights from Croma-Pharma (Austria; Hugel’s BTX sales partner in the US, Europe,and Australia). The Stada acquisition bodes well for Hugel, which should enjoy strongsynergies with the generics firm when it releases BTX and filler products in Europe. Hugel’sfillers won CE marking in 2015, and its BTX products should win European approval in 1H19.    To bolster US distribution by tapping Bain’s global network: Armed with net cashof KRW527.3b, Hugel should implement a number of overseas expansion strategies. In 2H, weexpect it to: 1) strengthen its US distribution network by partnering with a big pharma; 2)establish subsidiaries and acquire distributors in key markets, which should help lift ASPs; and3) increase its stake in filler-making subsidiary Across, thus bolstering its net marginattributable to controlling shareholders. Considering Croma-Pharma’s weak distributionnetwork in the US, Bain Capital is likely to move swiftly to find Hugel a sales partner in the US.    Hugel’s BTX products should win US approval in 1H19.

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