OTSUKA's ACQUISITION OF PHARMAVITE NUTRITIONAL SUPPLEMENT

OTSUKA's ACQUISITION OF PHARMAVITE NUTRITIONAL SUPPLEMENT operation is the Japanese firm's first U.S. venture. The purchase will provide Otsuka with a U.S. business generating approximately $80 mil. in annual revenues. Announced as an agreement-in-principle on Dec. 27, the cash deal is expected to close in early January. Otsuka said it plans to introduce Otsuka-developed pharmaceutical and nutritional products into the U.S. market through Pharmavite's distribution channels, and to introduce Pharmavite's main product lines in Japan and other countries. "We view the merger of our companies as a bold step in our continuing drive to establish a meaningful, viable Otsuka presence in the Pacific Rim," the firm said in a same-day release. A privately held company, Otsuka said it is Japan's third largest pharmaceutical firm, with fiscal 1988 sales of $5 bil. Pharmavite Corp., based in Arleta, California, is also privately held. "Otsuka will provide us with significant financial and other resources for expansion of our business, and it has pledged to help us expand both our Nature Made brand and private label products," Pharmavite said. "Industry sales surveys currently rank Pharmavite's Nature Made brand of nutritional supplements number one and its private label products number two," the release notes. The company's vitamin and mineral supplement products are distributed by the major wholesalers and sold nationwide through more than 30,000 retail outlets. Otsuka brings to its soon-to-be-acquired U.S. business the financial clout necessary to expand operations in a changing vitamin/nutritional product market. In recent years, the increased sales by mass market retailers at the expense of health food stores, direct sales and mail order businesses have put greater pricing pressure on smaller manufacturers. Another player to recognize and adapt to the new marketing environment has been another California-based manufacturer, P. Leiner. During 1988, P. Leiner has increased its annual revenue base by about 50%, to the $120 mil. level, through the purchase of two smaller producers, Vita-Fresh and Freshlabs.