Chemdex to acquire Promedix for $275M

PALO ALTO -- Chemdex Corp., a newly public pharmaceuticals e-commerce company, Wednesday said it would acquire a company involved in online medical transactions, Promedix.com, in a stock deal valued at $275 million.

Chemdex's (Nasdaq:CDMX) entry into specialty medicines comes after it went public earlier this year as an e-commerce company focusing on life sciences, providing an online marketplace where science professionals can buy hard-to-find chemicals and compounds.

The company said it will use its technology to build the business Promedix has made selling specialty medicines online to hospitals. In announcing its new deal Chemdex said its technology will work well in other sectors.

"This acquisition highlights the fact that the assets we have built at Chemdex are scalable to other markets, and we can apply what we have learned to increase supply chain efficiencies in multiple industries," said David Perry, president, chief executive officer and co-founder of Chemdex.

Good market for medicines
Chemdex, whose sales in the last quarter were $2.9 million, declined to disclose the Salt Lake City, Utah-based Promedix's sales. Robin Abrams, chief operating officer of Chemdex, said "It's fairly small now, but it has the potential to grow very quickly, in the pattern of business-to- business e-commerce companies."

Consulting firm Aberdeen Group said that the market for specialty medicines is about $20 billion, larger than the $9.8 billion market Chemdex estimates for life science materials.

"With the acquisition of Promedix.com, Chemdex has moved to solidify its role as a leading business-to-business market maker," said Tim Minahan, senior analyst in Aberdeen Group's e-commerce practice.

The deal will be paid for with 12 million Chemdex shares. Chemdex closed Tuesday at $27.875, up $4.875. Promedix.com will spin off its existing specialty medical product distribution business, which is not part of the acquisition.