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G Naga Sridhar Aurobindo Pharma has signed a definitive agreement to acquire certain assets from Sandoz Inc, US, a Novartis division, for $900 million. The proposed acquisition comprises Sandoz’s dermatology business and a portfolio of oral solid products along with commercial and manufacturing infrastructure in the US.
Touted as one of the biggest buys in recent years by the Indian pharma sector, the acquisition will be debt- and cash-free, and will be made through Aurobindo’s wholly-owned subsidiary in the US.
“The acquisition announced today is in line with our strategy to grow and diversify our business in the US. Acquiring these businesses from Sandoz will allow us to further expand our product offering and to become a leading player in the generic dermatology market,” Aurobindo Managing Director N Govindarajan said in a press release here on Thursday.
The transaction will position Aurobindo as the second largest dermatology player and the No 2 generics company in the US by prescriptions.
“We will be focussed on leveraging our group’s market-leading, vertically integrated and highly efficient manufacturing base to enhance the market position and the medium-term profitability of the businesses we are acquiring,’’ Govindarajan said.
The acquisition will include a portfolio of dermatology and oral solids, authorised generics and in-licensing products, branded dermatology products, three manufacturing facilities — at Hicksville, Melville and Wilson — and 100 per cent shareholding in Eon Labs Inc, a wholly-owned subsidiary of Sandoz. This will add approximately 300 products, including projects in development as well as commercial and manufacturing capabilities in the US.
The portfolio being acquired saw net sales of around $1.2 billion in calendar 2017. In 2018 first half, it generated sales of $0.6 billion.
Sales forecast
The transaction is expected to close in 2019 following approval from various bodies including the US Federal Trade Commission (FTC). After the expiration of certain in-licensed product contracts and rationalisation of acquired products that will not hurt profitability (but before the impact of any potential FTC-led divestments), the portfolio is expected to generate over $0.9 billion in sales in the first year post deal for Aurobindo.
Acquisition impact p10
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