India's Cipla swoops down on two U.S. firms in $550M worth of deals

Indian generics maker Cipla has agreed to buy two U.S.-based companies, InvaGen Pharmaceuticals and Exelan Pharmaceuticals, in a total transaction valued at $550 million, making something of an unexpected play from its emerging market expansion focus.

Cipla said its U.K. arm will handle the all-cash transactions that are seen bringing in combined revenues of more than $200 million for the year ended December 2014 and over $225 million up to June 2015, according to a press release.

"This acquisition, which is the second landmark acquisition in Cipla's 80 years of history, will give the company scale in the U.S. generics market through a wide ranging product portfolio in CNS, CVS, anti-infectives, diabetes as well as other value added generics," Cipla said in the release.

"InvaGen offers a large capacity manufacturing base in Hauppauge, NY, and a skilled U.S.-based R&D organization, Cipla's first such presence in the U.S."

In June, Cipla said acquisitions that help it grow in emerging markets are on the cards as the Indian drugmaker looks to expand into new geographies, CEO Subhanu Saxena told Reuters.

The CEO said that the company wants to focus on new emerging markets in Eastern Europe and Latin America, as well as ramp up in the U.S. to 20% of sales by 2020 from around 8% now to keep pace with domestic rivals, Reuters said.

Saxena also told Reuters that the U.S. growth plan could also include acquisitions, but at a realistic price.

But the U.S. purchases likely change the pitch a bit for Cipla, giving it access to sales and other staff.

"We see InvaGen as a strong strategic fit with a relevant diverse portfolio as well as a strong market and customer presence," Saxena said in the release. "With a local manufacturing facility, Cipla can further strengthen its presence and commitment to serve patients in the country."

InvaGen would provide Cipla with about 40 approved ANDAs, 32 marketed products, and 30 pipeline products which are expected to be approved over the next four years, according to the release.

"In addition, InvaGen has filed 5 first-to-file products which represent a market size of ~$8 billion in revenue by 2018," the release said.

- here's the Cipla release