Now that Mylan ($MYL) has agreed to buy Strides Arcolab's injectables unit for $1.6 billion, analysts are seeing potential injectable drug deals on every corner.
Jordan's Hikma recently said that it has gotten some interest for its growing injectables operations. Now, analysts are sizing up the chances of a firm like Pfizer ($PFE) or Teva Pharmaceutical Industries ($TEVA) snatching the injectables unit of India's Claris Lifesciences. While it is does not come with the track record or pipeline of Stride's Agila unit, according to Bloomberg, they say it might fetch half a billion dollars.
It is a matter of supply and demand. There are shortages of sterile injectable drugs in the U.S. and growing demand for but only a limited number of FDA-approved plants to make them. The largest producer in the U.S., Hospira ($HSP), continues to struggle to get its plants to full capacity after running into FDA compliance problems, presenting immediate opportunity.
Ranjit Kapadia, an analyst at Centrum Broking in Mumbai, tells the news service, "There's a scarcity of injectable facilities in the global space, and in the U.S. there's a shortage of injectable products, so this may lead to an acquisition." Claris has 5 FDA-sanctioned manufacturing facilities in Ahmedabad, Bloomberg points out, although it is approved to manufacture only 9 injectable drugs for the U.S., compared to the 32 approvals for Strides' Agila Specialties. Claris ran into some FDA issues a few years ago that it has since resolved.
Claris didn't have anything to say about a possible buyout, but that doesn't stop talk among investors scouting for the next big deal. When rumors began last summer that Strides was shopping its injectables business, companies like Pfizer and Novartis ($NVS) were mentioned as likely buyers. But Mylan got the prize, paying a multiple of 6.3 times Agila's 2012 sales of $255 million, which Bloomberg says is a record for an Indian company where the deal exceeded $100 million.
"It's a low-cost manufacturing base; it's U.S. FDA-approved," Bhavin Shah, a Mumbai-based analyst at Dolat Capital Market says of Claris. "That's the most important thing--from day one you can start production."
- read the Bloomberg story