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The negotiations between the pharmaceutical and medical equipment importer Promedico and ethical drug importer Neopharm have reached the finish line after many months.

According to the impending agreement, Neopharm is expected to buy out Promedico's business activities and merge them into its own business, Haaretz has learned.

Promedico, owned by Benjamin Jesselson, has annual sales of $200 million. Neopharm is controlled by CEO David Fuhrer, and has annual sales of some $100 million.

Promedico employs 350 workers. It markets, distributes and manufactures more than 1,000 products and has moved into consumer products in recent years. One of its biggest successes is the sale of infant formula Similac. Today Promedico controls 45 to 50 percent of the formula market.

The merger is likely to strengthen the firms, as the fierce competition in the sector has hurt both companies' market shares. It will strengthen Neopharm's leverage with retail chains, in particular because of the importance of Similac, especially after the Remedia affair, in which a lack of B1 vitamins in the formula caused the deaths of two infants and serious injuries to 15 others. Remedia's 33 percent market share was divided up by its two main rivals, Materna and Similac.

Promedico has four main business areas: medical equipment, pharmaceuticals and vaccines, infant and medicinal food products, and nonprescription drugs.

Jesselson, age 52, who is an ultra-Orthodox businessman from Jerusalem, was connected to Shlomo Eisenberg in the Arad shares affair. He was indicted in 1998, but acquitted in 2003.

Neopharm is the largest marketer of patented medicines in Israel.

Promedico's employees are worried about their jobs in the wake of a merger, even though sources close to Neopharm say that there will be no firings.

Both Promedico and Neopharm refused to comment on this report.