The eye drug market is hot, and specialty drugmaker Akorn Pharmaceuticals ($AKRX) wants a bigger share of it. The Illinois-based company scored a $640 million deal for rival Hi-Tech Pharmacal, a pickup that will make it the country's third-largest generic ophthalmic player, the company says.
Akorn will pay $43.50 per Hi-Tech share, a 23.5% premium, and expects the transaction to result in annual revenues north of $500 million. And Hi-Tech's products, which include generic eye drops based on Merck's ($MRK) glaucoma drugs Cosopt and Trusopt, will not only support Akorn's existing TheraTears eye-care offerings but also help juice up its portfolio in other areas.
"This is a transformative event for our company. The portfolio of Hi-Tech products is a great strategic fit to our currently marketed products," Akorn CEO Raj Rai said in a statement.
Hi-Tech will take Akorn beyond eye drugs and into other dosage forms, such as oral liquids, nasal sprays and topical ointments. The Amityville, NJ-based company sells an array of branded prescription drugs and over-the-counter products, including generic versions of the GlaxoSmithKline ($GSK) allergy spray Flonase and the Roche ($RHHBY) antibiotic Bactrim.
The deal should also position Akorn well in the eye-care market, which lately has seen its fair share of M&A activity. Novartis ($NVS) got the ball rolling with its $12.9 billion deal for Alcon in 2010. Valeant Pharmaceuticals ($VRX) quickly continued the trend, beefing up the eye-drug business it acquired in a 2010 buyout of Aton. Last year, the Canadian pharma passed on ISTA Pharmaceuticals because of a lengthy evaluation process but shortly thereafter grabbed Eyetech in its place. Just last month, Valeant closed on its $8.7 billion deal for ophthalmology leader Bausch + Lomb.
It's not hard to see why companies are after ophthalmic products; Roche and Regeneron ($REGN) are illustrating how lucrative the market is, and so far their drugs--Lucentis and Eylea, respectively--have delivered. Roche's drug, originally approved for wet age-related macular degeneration, has welcomed new approvals for diabetic macular edema (DME) and macular edema following retinal vein occlusion. And Eylea, charging hard, is right on its tail: After hauling in $837.9 million in U.S. sales in 2012, its first full year on the market, Regeneron recently unveiled data putting Eylea on the path to its own DME approval.
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