Strategy

Cipla Buys Two U.S. Pharma Firms for $550M

The acquisitions give the Indian drug maker its first manufacturing plant in the U.S. and an opportunity to build U.S. market share.
Katie Kuehner-HebertSeptember 4, 2015

India’s Cipla Ltd. is making a bid to build a manufacturing presence in the U.S., announcing it will buy two U.S. generic drug makers for $550 million.

The acquisitions of privately held InvaGen Pharmaceuticals and Exelan Pharmaceuticals in an all-cash deal give Cipla its first manufacturing plant in the U.S., 32 products already on the market and 30 pipeline products set to be approved for sale over the next four years.

“This investment is in line with Cipla’s strategy to grow Cipla’s share in the U.S. pharmaceutical market,” Cipla’s chief executive Subhanu Saxena said in a news release. “We see InvaGen as a strong strategic fit with a relevant diverse portfolio as well as a strong market and customer presence.”

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“With a local manufacturing facility, Cipla can further strengthen its presence and commitment to serve patients in the country,” he added.

As Bloomberg reports, generic drug makers in India have been seeking U.S. acquisitions to expand their product line since the U.S. Food and Drug Administration increased scrutiny of overseas production, making it harder to get approvals. In July, Mumbai-based Lupin said it would buy New Jersey-based Gavis for $880 million.

Cipla is “trying to fill in a gap in the U.S., which is only 8% of their sales now,” said Surajit Pal, an analyst at Prabhudas Lilladher in Mumbai. “With their own growth and these acquisitions, their sales in the U.S. may reach $450 million to $500 million.”

The deal is Cipla’s most significant since the buyout of South Africa’s Medpro two years ago. “The portfolio being bought is largely oral products, so I don’t think the margins will be huge, but at least they have something to get them going in the U.S.,” Hemant Bakhru, analyst at investment bank UBS, told Reuters.

Cipla shares rose as much as 4% after the announcement, before closing nearly 1% lower at 649.55 rupees.

Hauppauge, N.Y.-based InvaGen makes generic drugs for the central nervous system and cardiovascular system, as well as drugs to fight diabetes, infections and depression. Delaware-based Exelan sells products manufactured by InvaGen to government and institutional buyers.