Concordia scores ex-Big Pharma drugs in $1.2B Covis buyout

Concordia Healthcare is snatching up Covis Pharma's pharma and injectables units for $1.2 billion in cash, beefing up its generics portfolio and riding the recent wave of pharma M&A.

Toronto, Canada-based Concordia will win 18 branded and generic drugs in the deal, including Nilandron for metastatic prostate cancer; Lanoxin for mild-to-moderate heart failure and atrial fibrillation; and Plaquenil for lupus and rheumatoid arthritis. The company expects the buy to add more than 50% to adjusted earnings this year, with the help of $20 million worth of postmerger cost cuts.

While the deal will have an "immediate and material impact" on Concordia's pocketbook, the acquisition also creates "greater scale and diversification" for the company, supporting its "aggressive growth plans," CEO Mark Thompson said in a statement. The meds will add to Concordia's existing offerings in orphan drugs and medical devices.

Covis expects to report fourth-quarter revenue of up to $52 million, with the full year hitting somewhere between $140 million and $145 million. That's a big chunk of new sales for Concordia, which itself is expecting full-year 2014 revenue of $119 million to $122 million. For Q3, Concordia reported its first profit in three quarters, bringing its bottom line to $7.9 million for the first 9 months of 2014. It's planning to finance the cash deal with a combination of bank debt, bonds and equity. 

In picking up Covis, Concordia nabs a basketful of former Big Pharma products. Covis picked up U.S. rights to a handful of GlaxoSmithKline ($GSK) drugs in 2011, including the injectable antibiotic Fortax and cardiac drug Lanoxin. Two years later, Covis struck a deal with Sanofi ($SNY) to pick up U.S. rights to 5 drugs, including Nilandron and Rilutek. And Concordia has been snapping up products on its own, too. Last year, it acquired the irritable bowel syndrome med Donnatal from PBM Pharmaceuticals for $265.3 million, gaining ground in a growing GI market.

The Covis buyout comes amid a flurry of M&A deals industrywide, as drugmakers look to expand in potentially lucrative product areas and double down on their strongest units. In January, Shire ($SHPG) snapped up NPS Pharmaceuticals ($NPSP) for $5.2 billion to further beef up its rare disease business. Last month, Pfizer ($PFE) jumped on the biosimilars bandwagon with its $15 billion takeover of injectables specialist Hospira ($HSP), giving a significant boost to its established products division. Weeks later, deal-hungry Valeant Pharmaceuticals ($VRX) also came to the M&A table with a $10.1 billion deal for North Carolina-based Salix Pharmaceuticals ($SLXP), getting its hands on Salix's innovative GI portfolio.

- read Concordia's statement
- here's the Reuters article

Special Report: Pharma's Top 10 M&A Deals of 2013