Perrigo, which is under pressure from investors to shore up its finances, will raise a little cash with a deal to sell an API plant to India’s Strides Shasun.
Perrigo will offload the FDA-approved API plant in Ambernath, Maharashtra, for INR 1000 million ($14.8 million), Strides said today (PDF). Strides will continue to produce some of Perrigo’s products at the plant which it will supply to Perrigo under a long-term agreement. The deal is expected to close by the end of the year.
For Strides' part, it gets a plant that had sales of about $10.9 million for the fiscal year ended March 31 and is valued at $42.6 million. It went through its last FDA inspection without a Form 483. Strides intends to use the facility for captive consumption APIs and will move all of its integrated drug master files for captive consumption to the Perrigo plant, which has a potential capacity of 600 tons per year.
“With this acquisition, we bring into our fold a manufacturing facility designed to handle multipurpose small batch productions and accelerates our time to market,” Shashank Sinha, Strides Shasun group CEO, said in a statement. “This augurs well for the Strides’ stated strategy of building a backward integrated portfolio of niche and small volume products for the regulated markets.”
For Perrigo, it rids itself of an asset and picks up some cash as it works to improve its financial outlook. Perrigo has reportedly had the plant on the market for months. Perrigo acquired a majority stake in the plant for $11.5 million in cash in 2009, then shelled out an additional $7.2 million to own the facility outright two years ago.
The announcement comes just days after Perrigo said it was restructuring the Omega Pharma Belgium business acquired for $4.5 billion last March, a move that will cost up to 80 people their jobs.
Perrigo has been making moves to appease upset investors. In September, even as Mylan was trying to buy the company, investor Starboard Value slammed Perrigo's “woeful” performance, pointing to sinking operating margins in Perrigo’s consumer unit as proof of “a clear lack of focus and execution in the core business.”
A month later, the Dublin-based drugmaker unveiled plans to slash 800 jobs and buy back $2 billion in stock, steps that helped convince shareholders to turn away Mylan’s hostile takeover attempt. New CEO John Hendrickson has acknowledged to investors the company needs to do better. He suggested some of the problems could be laid at the feet of his predecessor and said Perrigo’s “recent track record of performance against our own expectations is unacceptable.”