Moneycontrol Bureau
Cipla is set to buy 100 percent of generic businesses of two pharmaceutical companies in the US for USD 550 million. It is the second landmark acquisition in Cipla’s 80 years of history.
"Cipla today announced that its UK arm, Cipla EU has entered into definitive agreements to acquire two US-based companies, InvaGen Pharmaceuticals Inc, and Exelan Pharmaceuticals Inc," said the Mumbai-based pharma company in its filing.
The transaction being subject to certain closing conditions, is valued at USD 550 million and will be an all cash transaction, it added.
"This investment is in line with Cipla’s strategy to grow Cipla’s share in the US pharmaceutical market. We see InvaGen as a strong strategic fit with a relevant diverse portfolio as well as a strong market and customer presence," said Subhanu Saxena, MD & Global CEO, Cipla (in a filing).
According to Saxena, acquisitions are EPS accretive from day one.
Cipla said the combined revenue from these transactions is over USD 200 million for the year ended December 2014 and over USD 225 million in LTM June 2015.This acquisition will give the company scale in the US generics market through a wide ranging product portfolio in CNS, CVS, anti-infectives, diabetes as well as other value added generics, it added.In an interview to CNBC-TV18, Saxena said the transaction will be closed in the next few months. "We are looking to double India's business in 3-5 years. India's contribution is 45 percent to overall business," he added.On Thursday, sources already told CNBC-TV18 that Cipla is likely to acquire Hetero Drugs' US business (InvaGen and Camber). However, Hetero today clarified that the current sale of InvaGen pharmaceuticals is the sale of strategic investment by the Hetero promoter group which has a different product portfolio than Hetero.It said InvaGen Pharmaceuticals Inc is not linked directly to the flagship companies of the Hetero group i.e. Hetero Drugs or Hetero Labs. "We will continue to strengthen presence in US market by investing in US Generics and speciality products through its subsidiary firm Camber Pharmaceuticals Inc in US," Hetero added.
The acquisition of InvaGen pharmaceuticals, which has a large capacity manufacturing base in Hauppauge, New York, provides Cipla with about 40 approved ANDAs, 32 marketed products, and 30 pipeline products which are expected to be approved over the next 4 years.
In addition, InvaGen has filed 5 first-to-file products which represent a market size of around USD 8 billion in revenue by 2018.
InvaGen's acquisition provides Cipla with an access to large wholesalers/retailers in the US while acquisition of Exelan Pharmaceuticals, which is based in Delaware, provides Cipla access to the government and institutional market in the US.
Barclays is acting as financial advisor to Cipla.
At 09:37 hours IST, the scrip of Cipla was quoting at Rs 666.50, up Rs 9.65, or 1.47 percent after rising 3.4 percent in early trade on the BSE.
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