Cipla to acquire 100% stake in two US generic drug firms for $550 mn

Cipla, a global major in generic pharmaceuticals, today announced the acquisition of two US-based generic drug companies, InvaGen Pharmaceuticals Inc and Exelan Pharmaceuticals Inc, in a $550 million all-cash transaction.

The acquisition is being made through Cipla's UK arm, Cipla EU and the two parties have entered into definitive agreements on the sale and acquisition.

The transaction, which is subject to certain closing conditions, will give Cipla scale in the US generics market with a strong manufacturing and R&D base, access to broad product portfolio and a strong customer base consisting of top wholesalers / retailers, the company said in a release.

The two companies being acquired had combined revenues of over $200 million for the year ended December 2014 and over $225 million in LTM in June 2015.

This acquisition, which is the second landmark acquisition in Cipla's 80 years of history, 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.

InvaGen offers a large capacity manufacturing base in Hauppauge, NY and a skilled US-based R&D organization, Cipla's first such presence in the US.

The acquisition of InvaGen pharmaceuticals also 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.

They represent a balanced, diversified and growing portfolio targeting highly attractive, large and niche markets. In addition, InvaGen has filed five first-to-file products which represent a market size of about $8 billion in revenue by 2018.

Dosage forms include immediate release, modified release and extended release tablets and capsules. With a manufacturing footprint of about 350,000 sq ft of GMP area, InvaGen has 3 units located in Long Island, NY, with a total production capacity of 12 billion tablets and capsules per annum and about 500 employees.

This acquisition further provides Cipla with an access to large wholesalers / retailers in the US.

The acquisition of Exelan Pharmaceuticals provides Cipla access to the government and institutional market in the US through Exelan's deep expertise, engagement and experienced management team in the business.

''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. With a local manufacturing facility, Cipla can further strengthen its presence and commitment to serve patients in the country,'' Subhanu Saxena, MD and Global CEO of Cipla, said.

"We are delighted with the immediate and substantial relevance this combination brings to Cipla in the USA. We are committed to an orderly transition process with customers and InvaGen to ensure the on-going continuity of a high quality and reliable supply to our customers and their patients,'' added Tim Crew, CEO North America and director of Cipla USA Inc.

"This is an exciting opportunity for InvaGen to join with Cipla. InvaGen brings an experienced team and good manufacturing capabilities to the partnership. We are confident that the combination of InvaGen and Cipla will significantly enhance the product portfolio offering, including specialty products, to the US patients and will give InvaGen access to Cipla's global expertise and presence," Dr Sudhakar Vidiyala, president and CEO, InvaGen Pharmaceuticals Inc, commented.

The completion of this acquisition is subject to certain conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions, Cipla said.

Barclays is acting as financial advisor to Cipla. Hughes Hubbard & Reed LLP are acting as legal advisor to Cipla.

The Jefferies LLL is acting as an exclusive financial advisor to InvaGen. Manatt, Phelps & Phillips, LLP are acting as legal advisor to InvaGen.