Belgium's UCB has a generics operation in the U.S. with a 400,000-square-foot-manufacturing facility that it has been trying since last year to unload, and India's Cipla and Lupin are both reportedly in the running to buy it.
Sources tell Bloomberg that the two Indian drugmakers were among others to make first-round bids for Kremers Urban Pharmaceuticals, a business that UCB put back on the market after a $1.5 billion deal with private equity firms fell through last year. They say that it might fetch about $1 billion.
Both Cipla and Lupin have been looking for deals to expand their production around the world. The Kremers Urban facility in Seymour, IN, would provide U.S. production that would help them better compete with compatriot Sun Pharmaceutical, whose $4 billion acquisition this year of Ranbaxy Laboratories catapulted it into the largest Indian generics maker in the U.S. Neither Cipla or Lupin would comment on the report to Bloomberg but a spokesperson for UCB said, "We have a broad range of interested parties around the globe."
Princeton, NJ-based Kremers Urban, in 2011 invested about $11 million expanding its production operation in Indiana which has dedicated containment facilities and specializes in difficult-to-produce or limited-supply API or finished goods formulations, including biosimilars. Actually, it was one of the difficult-to-manufacture products that led UCB to back out of a $1.53 billion deal last year to sell the business to private equity firms Advent International and Avista Capital Partners. It was canceled after the FDA asked Kremers Urban for an additional study on its copy of Johnson & Johnson's ($JNJ) Concerta pill for attention-deficit hyperactivity disorder (ADHD).
In early 2014, the FDA said it was stepping up due diligence on generic drugs to make sure they are "therapeutically equivalent." It said the first knockoffs it would look at were copies of ADHD drugs, generic antidepressants and seizure drugs. In November, Ireland-based Mallinckrodt ($MNK) said the FDA had questioned its version of Concerta. A month later Kremers Urban disclosed the same thing, and said its deal with Advent and Avista was being canceled while it cleared up the regulatory matter but that it still planned on selling Kremers Urban.
Lupin has been looking for M&A opportunities to boost its revenues after reporting disappointing earnings over that last three quarters, while Cipla has been expanding its production in emerging markets.
- read the Bloomberg story