dna had reported on June 24 this year about an impending big-ticket acquisition by Lupin.
In biggest acquisition by an Indian drugmaker overseas, Lupin on Thursday announced the buyout of US-based GAVIS Pharmaceuticals LLC and Novel Laboratories Inc (known as GAVIS) for $880 million, or Rs 5,610 crore, to expand presence in the US generics market.
dna had reported on June 24 this year about an impending big-ticket acquisition by Lupin.
GAVIS's is fourth acquisition by Lupin this year, earlier being in Mexico, Brazil and Russia.
Industry insiders said more acquisitions by Lupin are in the pipeline.
The acquisition of the New Jersey-based privately held GAVIS, is a cash and debt-free transaction and was unanimously approved by the boards of the two companies.
To fund the acquisition, Lupin, a debt-free company, would also take a bridge loan for the buyout, which is subject to certain closing conditions, Lupin's board in June had approved an enabling resolution to raise up to Rs 7,500 via securities. The drug maker also has a long-term financial arrangement with banks.
"The acquisition enhances our scale in the US generic market and broadens pipeline in dermatology, controlled substance products and other high-value and niche generics," Lupin said in a statement.
Lupin gets an R&D facility and its first manufacturing base in the US with the acquisition. GAVIS recorded sales of $96 million in fiscal 2014 and has over 250 employees, out of which 100 are focused on R&D.
GAVIS has 66 abbreviated new drug application (ANDA) filings pending approval with the US FDA and a pipeline of over 65 products under development. Around 72% of these filings represent niche dosage forms. To date, GAVIS has filed 25 Para IVs and eight first-to-file (FTF) products, while its pending filings address a market value of about $9 billion. The combined company will have a portfolio of 101 in-market products, 164 cumulative filings pending approval and a deep pipeline of products under development for the US. The acquisition creates the fifth largest portfolio of ANDA filings with the US FDA, addressing a $63.8 billion market, the company said.
Vinita Gupta, CEO, Lupin, said, "Looking at a strong pipeline, GAVIS's revenue growth would be more than three times by 2018. Due to a lack of local presence, we could not participated in all channels in the US, especially in the government business. Now, we may look at moving some products out of India to the US which would help in entering government channels."
She said the transaction is expected be completed in the third quarter of the current fiscal, as it is subject to regulatory approvals. The acquisition is expected to be accretive to the earnings from the first full year of operations.
Lupin on Thursday also reported a 16% decline in its net profit to Rs 525 crore during the quarter ended June 30. Net sales fell 6.4% to Rs 3074.3 crore. Operating profit declined 22% to Rs 892.2 crore during the first quarter of the fiscal.
Nilesh Gupta, MD, Lupin, said, "Slowdown in approvals in the US dampened growth during the quarter, even as the company continues to improve on gross margins,"
The company also said that it is scouting specialty assets in the US and other buyouts in Europe, but will go for another major acquisition in the US.
Meantime, its Goa facility, which supplies to US, EU and Japan markets, has received a Form 483 with nine observations.
"The overall nature of the audit is fairly routine. The observations are related to standard operating prodecure, warehouse management, etc. As a company, quality is very important to us and we have always complied with the FDA. Though we are not happy that we received nine Form 483 observations but we don't think these would be anything serious," the MD said.
Sarabjit Kour Nangra, VP research - pharma, Angel Broking, "The acquisition looks very costly, coming in at 9.2xmarket cap/sales, given the size of the company, though funding will be not a problem given that the company has very little debt on the books."
Lupin shares closed at Rs 1,728.6 a piece on Thursday, 5.23% down over previous close.
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