Deal To Expand Specialty Pharmaceutical Business Platform

Covington, KY - Omnicare, Inc. announced that Omnicare has executed a definitive agreement to acquire substantially all of the assets of RxCrossroads and certain of its affiliates for a total purchase price of $235 million in cash.

RxCrossroads, based in Louisville, Kentucky, provides specialty distribution, product support and mail order pharmacy services for pharmaceutical manufacturers and biotechnology companies, generally for high-cost drugs used in the treatment of chronic disease states. Through its complement of services, RxCrossroads helps pharmaceutical manufacturers, physicians and patients navigate and solve access and distribution challenges for certain medications. RxCrossroads also develops and manages tailored product support programs to meet specific market needs including: reimbursement services, patient assistance programs, third-party logistics services and pharmacy services and sampling programs nationwide. In total, RxCrossroads distributes drug and biological products with a retail value of more than $1 billion.

The transaction is subject to the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, and is expected to close during the third quarter of 2005. As it contracts with manufacturers to provide products on a consignment basis, RxCrossroads' revenues from service operations are currently running at the annualized rate of $46 million, and the transaction is expected to be modestly accretive to Omnicare's earnings per share in 2005, with accretion increasing in 2006 and beyond.

"We view the acquisition of RxCrossroads as a major new opportunity to leverage the core strengths of our existing businesses to enhance Omnicare's future growth. The addition of RxCrossroads will enhance Omnicare's position in capitalizing on the rapid growth in drug development and discovery, particularly in biotechnology, and the trend toward the outsourcing of product research, launch and post-launch services. This transaction will allow us to provide the full spectrum of product development, commercialization and post-commercialization services: from drug discovery and research services through our existing CRO business to product distribution, support, patient assistance and reimbursement services," said Joel F. Gemunder, president and chief executive officer of Omnicare. "This is important as the acquisition of RxCrossroads differentiates Omnicare as the only provider of end-to-end custom product solutions to pharmaceutical and biotechnology companies. This will not only allow us to provide greater service offerings but will allow us to leverage the investment we have made in our CRO business, as well as the existing infrastructure of our institutional pharmacy network and our client relationships with pharmaceutical and biotechnology companies."

"Pharmaceutical companies, medical device manufacturers and biotechnology firms choose RxCrossroads because of our unique capabilities and tailored approach to the development and execution of client programs," said Jim Karp, chief executive officer of RxCrossroads. "We are pleased to combine RxCrossroads' strengths with those of Omnicare and thereby create even greater opportunities for both companies to expand services for manufacturers, patients and providers."

"The management and staff at RxCrossroads look forward to the continued growth and development of our core service offerings from our Louisville-based operation centers as well as seeking innovative new services made possible by joining Omnicare," said Nitin Sahney, president of RxCrossroads. "The synergies between Omnicare and RxCrossroads will ensure integrated product commercialization service offerings to existing and new clients. Using our combined knowledge of healthcare product development, reimbursement and distribution services, we will deliver a range of services that support speed to market, brand uptake and brand loyalty."

Concluding, Mr. Gemunder noted that RxCrossroads' management has a proven track record of rapid growth and attractive profitability. "We are pleased RxCrossroads is joining the Omnicare organization. The resources and expertise it brings, along with the complementary nature of the combined businesses, enhance our ability to participate in the drug development process and offer commercialization and post launch services providing Omnicare a distinct advantage as we expand our specialty pharmaceutical business and provide a major new avenue of growth."

SOURCE: Omnicare, Inc.