BackSun Pharma’s US arm Caraco to buy URL’s generics business
Generic assets of URL Pharma will be owned and managed by Sun’s US unit Caraco after deal is completed
Premium(Sun Pharma has been looking for a sizable acquisition in the US and has been sitting on cash raised via a foreign currency bond sale, internal accruals.)
Mumbai: Sun Pharmaceutical Industries Ltd, India’s most valuable drug maker, said on Monday its US subsidiary Caraco Pharmaceutical Laboratories Ltd agreed to buy the generic business of URL Pharma Inc., a company that Takeda Pharmaceuticals USA Inc. acquired in April.
The valuation of the transaction was not disclosed.
Takeda Pharmaceuticals USA is a wholly-owned subsidiary of Japan’s Takeda Pharmaceutical Co. Ltd.
URL Pharma’s leading product is Colcrys, a colchicine brand and its variants, used to treat and prevent gout flares. Net sales for Colcrys in calendar year 2011 was more than $430 million.
These products have, however, not been included in the Sun Pharma deal.
Upon completion of the purchase, the generic assets of URL Pharma will be owned and managed by Caraco. The deal is subject to regulatory approvals.
The transaction will revive the business of Caraco, which got into difficulties after the US Food and Drug Administration (FDA) stopped production at the company in 2009 over non-compliance with quality manufacturing norms, according to Ranjit Kapadia, a sector analyst and senior vice president, Centrum Broking Pvt. Ltd.
Although the regulator allowed the company to start selling part of its production after inspections this year, it hasn’t been able to generate a comfortable level of revenue. Sun Pharma has therefore been looking for a sizable acquisition in the US. The Indian drug maker has also been sitting on cash raised through a foreign currency bond sale and internal accruals.
Sun Pharma gets more than 60% of its revenue from international markets. The company acquired Israel-based Taro Pharmaceutical Industries Ltd in 2009 in anticipation that the company, which has a significant share of the US generic drug market, would contribute to its US revenue immediately.
But because of long delays in concluding the deal, Sun Pharma’s US business suffered. Taro Pharma, now a subsidiary of Sun Pharma, has started contributing significantly to Sun Pharma’s revenue in the last three quarters.
URL Pharma’s 2011 calendar year revenue was nearly $600 million, according to an earlier release. Sun Pharma’s deal includes URL Pharma’s generic business excluding Colcrys, the gout treatment business, which was at least $430 million in calendar year 2011.
“It’s not a high-value deal for Sun Pharma, as it involves only non-Colcrys business of URL Pharma. The completion of the deal may not take much time as it is a privately held firm," said a person familiar with the deal, who didn’t want to be identified.
Sun Pharma shares gained 0.47% to ₹ 720 apiece on BSE on Monday. The Sensex lost 0.38% to 19,244.42 points.
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