The drug maker Mylan announced on Wednesday that it was acquiring Agila Specialties Private, an Indian manufacturer of generic injectable drugs, for $1.6 billion in cash.
The move would double Mylan’s presence in the injectable-drug market, a fast-growing segment of the generic drug industry that has been troubled by major quality and supply problems in recent years.
Mylan’s chief executive, Heather Bresch, said in a telephone interview that the acquisition, expected to be completed in the fourth quarter, would help expand the company’s presence in emerging overseas markets and establish it as a major player in the injectables market. Mylan expects the injectables market to grow by 13 percent a year through 2017.
Despite this growth, however, most major manufacturers of injectable drugs have suffered from serious supply and quality problems in recent years, leading to recalls and a nationwide shortage of critical products like chemotherapy drugs.
Ms. Bresch said Mylan’s recognizable brand — it is one of the world’s largest makers of generic drugs — would set it apart from its competitors.
“Our ability to bring real quality leadership in this space is our real opportunity,” she said.
In the past, the injectable business was so competitive that companies drove prices too low, said Rajiv Malik, Mylan’s president. But now that several large manufacturers — including Hospira, Sandoz and Teva — have invested millions of dollars in upgrading their plants, that picture has changed.
“I think they won’t be chasing the floor anymore anytime soon,” he said.
Mylan is acquiring Agila from the Indian pharmaceutical company Strides Arcolab.
Agila, which is based in Bangalore, sells more than 300 products worldwide, including 61 drugs in the United States. It has nine manufacturing facilities in India, Poland and Brazil, and Mylan says the company has a strong presence in emerging markets like Brazil.
Mylan, based near Pittsburgh, Pa., said it had received a commitment letter from Morgan Stanley for a $1 billion senior unsecured bridge term loan, which would be used in combination with the company’s existing cash and other lines of credit to pay for the acquisition.
Morgan Stanley is serving as financial adviser to Mylan, and Skadden, Arps, Slate, Meagher Flom is the legal adviser, assisted by Slaughter and May and Platinum Partners.
Article source: http://dealbook.nytimes.com/2013/02/27/mylan-to-acquire-injectable-drug-maker-for-1-6-billion/?partner=rss&emc=rss
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