Cipla buys 2 US companies for $550 m

PT Jyothi Datta MUMBAI | Updated on January 22, 2018 Published on September 04, 2015

Subhanu Saxena, Group CEO, Cipla Ltd

Y.K. Hamied, Chairman and Managing Director of Cipla (file photo)   -  Reuters

cipla chart

Acquisition will expand pharma majors footprint in the US generics market

Drug-maker Cipla has agreed to buy two US-based companies InvaGen Pharmaceuticals Inc and Exelan Pharmaceuticals Inc for $550 million (about ₹3,630 crore).  

The combined revenue of these companies is $200 million up to December 2014.

The acquisition, Cipla’s second in 80 years, would increase its footprint in the US generics market, bringing into its fold an expanded portfolio, a manufacturing base and a research centre.

 Billed as the world’s largest pharmaceutical market, the US is a $382-billion market (2014), including a generic drugs opportunity of $65 billion, according to IMS Health.

But the ₹11,000-crore Cipla is a late entrant in the US, a market that has been the main stay for Indian drug majors for over several years now.

Drug companies Dr Reddy’s, Lupin and Sun Pharma, for example, already operate in this market.

 A little over a month ago, Lupin went in for a big ticket transaction, announcing its $880 million deal to acquire New Jersey-based Gavis.

This was the country’s biggest overseas buy in the pharmaceutical segment.

In the recent past, Cipla management had hinted that its US “Go-Live” plan was on track.

Cipla Managing Director and Global Chief Executive Subhanu Saxena said that the investment was to grow Cipla’s share in the US pharmaceutical market.

The US contributes about eight per cent of its total sales and the deal is expected to close by the year-end. Amit Mookim, Country Principal (South Asia), IMS Consulting Group, observes that while the US market’s opportunity is a given, the challenge for companies after a high-value acquisition is to grow it from there on.

Hetero clarifies

Explaining its involvement in the transaction, Hyderabad-based Hetero Group clarified that it had sold its investment in Invagen and that had nothing to do with its own pharmaceutical portfolio in the US.

“InvaGen Pharmaceuticals Inc is not linked directly to the flagship companies of the Hetero group, that is, Hetero Drugs or Hetero Labs,” it said. And Hetero will continue to strengthen its presence in the US by investing in US generics and speciality products through its subsidiary firm Camber Pharmaceuticals Inc in the US, it added.

Invagen offerings

 The InvaGen buy would bring into Cipla’s fold a manufacturing base in Hauppauge, New York, and a skilled US-based research organisation, a first for Cipla in the US.

The acquisition of InvaGen pharmaceuticals provides Cipla with about 40 approved ANDAs (abbreviated new drug applications), 32 marketed products, and 30 pipeline products, expected to be approved over the next four years, Cipla said.

In addition, InvaGen has filed five first-to-file products which represent a market size of about $8 billion in revenue by 2018.

 InvaGen has three units located in Long Island, NY, with a total production capacity of 12 billion tablets and capsules per annum and about 500 employees.

The acquisition also provides Cipla with an access to large wholesalers-retailers in the US, it added.

Through Exelan Pharmaceuticals, Cipla would get access to the US government and institutional market.

Published on September 04, 2015
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