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Sun Pharmaceutical beefs up Australia play with Glaxo business buy

Leading drug manufacturer Sun Pharmaceutical Industries on Tuesday said that it has reached an agreement with GlaxoSmithKline to buy the latter's opiates business in Australia.

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Leading drug manufacturer Sun Pharmaceutical Industries on Tuesday said that it has reached an agreement with GlaxoSmithKline to buy the latter's opiates business in Australia.

In a statement issued on BSE, Sun Pharma said that the agreement was reached between the wholly owned subsidiaries of both the companies.

GSK’s opiates business, including related manufacturing sites in Latrobe (Tasmania) and Port Fairy (Victoria) and its portfolio of opiates products along with inventory, will be transferred to a subsidiary of Sun Pharma. The financial details of the transaction were not disclosed.

Iftach Seri, executive vice president of API business at Sun Pharma, said in the statement, “The global opiates market holds good potential and the addition of GSK’s opiates business will strengthen our positioning further. The acquisition is a part of our strategy towards building our portfolio of opiates and accessing strong capabilities in this segment.”

The product portfolio consists of poppy-derived opiate raw materials that are primarily used in the manufacture of analgesics (painkiller) for the treatment of moderate to severe pain. All employees from both sites will also be offered employment by Sun with the opiates business.

According to a pharma analyst, the acquisition was done in order to strengthen Sun Pharma's presence in controlled substances segment.

Steve Morris, general manager, GSK Opiates, in a statement, said, “The opiates business has been an important part of our Australian business for many years, but as our portfolio transitions, we believe now is the right time to hand this business over to someone else.” The transaction will allow GSK to simplify its operations in Australia and allow it to focus on delivering its innovative product portfolio that will be central to the company's growth strategy in the company, the statement added.

The transaction closure is subject to customary closing conditions and requisite regulatory and other approvals, and is expected to close by August 2015.

According to Surajit Pal, pharma analyst with Prabhudas Lilladher, the decision to purchase GSK's opiates business will help Sun Pharma's branded business in the Australian market. “From perspective of Sun's rest of the world (RoW) business, which is around $70-75 million per quarter, this opiates business is likely to add around revenue of $68 million per annum, or about 20-25% of business would be added. The size of the deal could be an estimated $200 million. This opportunity, I believe, will be restricted to Australia, New Zealand and Oceanian market,” said Pal.

Sun Pharma shares rose 2.01% to close at Rs 942.40 apiece on BSE. 

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