Dr Reddy's buys 8 US drugs from Teva, Allergan for $350 million

The combined sales of the branded versions of the products in the US is about $3.5 bn

Dr Reddy’s Laboratories (DRL) is ramping up its US business with the acquisition of eight drugs from the world’s largest generic drug-maker Teva and an affiliate of Allergan for $350 million (over Rs 2,300 crore).

This includes seven products which are pending US Food and Drugs Administration approval (abbreviated new drug application) and an approved product spread across diverse dosage forms. The combined sales of the branded versions of the products in the US is about $3.5 billion for the year ending April 2016, DRL said in a statement on Saturday.

The company said it “expects to finance the transaction using a combination of cash on hand and available borrowings under existing credit facilities.” The acquired portfolio comprises complex generics products which have limited competition and thus will boost revenue and profit margins.

US business contributes to about half of DRL’s revenues. Like other top Indian pharma companies, its US business has been under pressure because of price erosion and supply channel consolidation in the US.

The company’s three facilities, including two active pharmaceutical ingredient units and an oncology formulation unit, were served warning letter by the US FDA last November, adding to its woes.

Last July, Jerusalem-based Teva acquired Allergan in a $40.5-billion deal. The acquired portfolio consists of products that are being divested by Teva to fulfil a precondition to its acquisition of Allergan’s generics business. The acquisition of these ANDAs is also contingent on the closing of the Teva-Allergan generics transaction and approval by the US Federal Trade Commission of Dr Reddy’s as a buyer.

G V Prasad, co-chairman and CEO of Dr Reddy’s Laboratories said, “This transaction will add strength to our product portfolio, help us be more relevant in the US market.”

DRL’s peers Lupin and Cipla are growing their US business in an inorganic way with two recent acquisitions. Lupin acquired Gavis for $880 million and is focusing on building up its branded business in the market. Cipla acquired InvaGen and Exelan for $550 million and plans to increase its revenue from the segment from 8 per cent to 20 per cent over the next few years.

Alok Sonig, executive vice-president and head of North America (business) said, “Dr Reddy’s Laboratories has a strong track record in the US market with over 79 filed abbreviated new drug applications (ANDAs) pending approval, of which we believe 18 have first-to-file status. The acquisition of these attractive ANDAs from Teva will enhance our short-to-mid term aspirations and is consistent with our growth initiatives to identify inorganic opportunities to expand our base business.”
GOING FOR INORGANIC GROWTH
Recent acquisitions by other Indian pharma companies
 

* Lupin acquires US drugmaker Gavis for $880 million

* Cipla buys InvaGen and Exelan for $550 million

* Sun Pharma acquires InSite Vision for $48 million