Aurobindo Pharma, a Hyderabad, India-based manufacturer of generic pharmaceuticals and active pharmaceutical ingredients, has signed a binding offer to acquire commercial operations in seven Western European countries from Actavis, a Dublin, Ireland-based global, integrated specialty pharmaceutical company. Closing of the transaction is conditional on certain antitrust approvals and completion of employee consultation processes.
Aurobindo expects to acquire personnel, commercial infrastructure, products, marketing authorizations and dossier license rights. The companies will enter into a long-term commercial and supply arrangement to support the ongoing growth plans of these businesses. The acquisition expands Aurobindo’s front-end operations into five segments (generics, prescription products, over-the-counter products, hospital products and generics tenders) with approximately 1,200 products and an additional pipeline of over 200 products.
Management estimates the net sales for the acquired businesses would be about $433.6 million in 2013 with a growth rate of over 10% year-on-year. Although these businesses currently are loss-making, Aurobindo expects them to return to profitability in combination with its vertically-integrated platform and existing commercial infrastructure.
Since 2006, Aurobindo has been steadily expanding its European footprint through an increasing presence in the U.K., Spain and Germany.
V. Muralidharan, senior vice president of European operations for Aurobindo, said, “The acquisition of these European businesses is a value-enhancing and forward-looking initiative for Aurobindo. We have been clear about our intention to focus on growth initiatives in Europe and international markets, which together are expected to be key drivers for future growth. This transaction will complement our strategy of pursuing organic growth along with value-creating acquisitions within our served markets and adding complimentary growth platforms to provide scale and revenue diversity.”
Arvind Vasudeva, CEO of Aurobindo’s FormulationsBusiness, said, “We have carefully reviewed the Actavis European operations and concluded that with our cost competitiveness and group structure, we could significantly capitalize Actavis’ strong market position in these Western European countries and improve profitability, thereby accelerating our strategy of becoming a significant Gx player in Europe.”
Sigurdur Oli Olafsson, president of Actavis Pharma, said, “We believe that the value created by the commercial operations in these seven markets will be better maximized by Aurobindo, which will gain scale, additional products and enhanced competitive market share position as a result of this transaction. This transaction will permit Actavis to focus management time and resources to support accelerated investment in driving faster growth of other markets, including Central and Eastern Europe and Southeast Asia.”