Akorn owns approximately 3,80,000 square feet of pharmaceutical manufacturing, warehousing and distribution facilities situated on approximately 14 acres of land in Paonta Sahib
US-listed drugmaker Akorn Inc, whose $4.75 billion merger deal with German healthcare group Fresenius SE fell through last year, is exploring strategic alternatives for exiting its manufacturing facility at Paonta Sahib in Himachal Pradesh.
"On February 25, 2019, the company made a decision to explore strategic alternatives for exiting its Paonta Sahib, Himachal Pradesh, India manufacturing facility. The Paonta Sahib facility has not yet been FDA (Food and Drug Administration)-approved. It is a sterile injectable facility with separate areas dedicated to general injectable products, carbapenem injectable products, cephalosporin injectable products, and hormonal injectable products," said Akorn's latest annual report.
According to investment banking sources, the term strategic alternatives is somewhat of a codeword used by companies trying to put an asset up for sale. In this case, the Paonta Sahib facility could be a valuable asset for a drugmaker that is planning to set up or buy an existing facility. Akorn owns approximately 3,80,000 square feet of pharmaceutical manufacturing, warehousing and distribution facilities situated on approximately 14 acres of land in Paonta Sahib.
Akorn was actively pursuing FDA approval of the India facility, but it has not come through yet. Without the FDA approval to manufacture products for shipment to the US market, Akorn's India manufacturing facility failed to give the additional capacity required to support continued growth.
Akorn acquired the Paonta Sahib facility through a business combination in 2012. At that time, Akorn had acquired selected assets of Kilitch Drugs (India) Ltd. It had paid approximately $60.1 million in cash for the deal which involved primary assets such as Kilitch's pharmaceutical manufacturing facility in Paonta Sahib and its ongoing contract manufacturing business.
Over the years, Akorn has been repeatedly indicating that an inability to obtain or maintain certification for the India manufacturing facility could restrict its ability to achieve growth objectives, which would adversely affect business, financial condition and results of operations.
Fresenius SE in April 2018 said it decided to pull out of its planned $4.75-billion acquisition of Akorn after it found data integrity breaches at the US generic drug maker. This was after Fresenius in February last year warned it could terminate the deal if its own independent probe found Akorn breached US FDA data integrity requirements related to product development.
SOME TROUBLE
- 3.8L sq ft – Size of Akorn’s manufacturing, warehousing and distribution facilities in Paonta Sahib
- $60.1 mn – Cash Akorn had paid for acquiring selected assets of Kilitch Drugs in 2012
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