U.S. injectables maker Sagent Pharmaceuticals ($SGNT) is considering putting itself on the chopping block, and if or when it does, at least 5 Indian drugmakers could come calling.
The Illinois-based company has tapped advisory firm Perella Weinberg to lead a sale, drawing attention from the likes of India's Torrent Pharmaceuticals, Aurobindo Pharma, Cipla, Lupin and Dr. Reddy's Laboratories ($RDY), sources tell the International Business Times. Indian generics maker Sun Pharma was also interested in a deal and kicked off discussions, but backed out after finding out that the sale price would top $500 million. Large generic drugmakers and financial investors including private equity funds might also step up to the table, according to the IBT story.
But a sale isn't a sure thing, people familiar with the matter told Reuters. Sagent did not respond to the news outlet's request for comment and Perella Weinberg declined to comment about a potential sale.
A deal with Sagent could give Indian drugmakers a boost, the IBT points out, as the companies there face heightened scrutiny from the FDA and are looking for additional manufacturing sites to meet demand. Sagent contracts out much of its manufacturing but has a plant in China.
Sagent also boasts a portfolio of 55 products including anti-infective drugs such as propofol, adenosine and heparin. But the injectable business "is getting highly competitive so the margins are getting squeezed," a senior exec at Sagent told the IBT. And smaller generics companies are facing increased pressure from payers, forcing some to leverage scale in order to score favorable contracts, Reuters points out. Sagent "has a tailor-made injectable sales and distribution outfit that could suit Indian companies," the company exec said. "This is the right time to exit, as money is available and valuations will be better."
Dr. Reddy's, for one, has been on the lookout for potential deals. Last year, the company said that it was eyeing deals as big as $1 billion to flesh out its portfolio of higher-end products, including generic injectable drugs. "I think in the next two years it will be very important for us to make some good moves on inorganic growth," CFO Saumen Chakraborty said at the time.
Dr. Reddy's is not the only company looking to ride the injectables bandwagon. Pfizer ($PFE) last year shelled out $15 billion injectables specialist Hospira. In 2014, Jordan's Hikma expanded its injectables operations, paying $300 million to Boehringer Ingelheim to get injectable drugs once manufactured at the company's now-shuttered Ben Venue Plant.
Endo ($ENDP) has also made an injectables play. Last May the company said that it would scoop up Par Pharmaceutical for $8 billion to inherit the company's growing injectables portfolio. The deal was meant to generate double-digit revenue growth for Endo and boost its Qualitest generics business, an "extremely attractive and effective growth driver for the company" Endo CEO Rajiv De Silva said at the time.
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