Mylan holds back $250M in Agila buyout

In one fell swoop, and with a $1.75 billion payout, Mylan ($MYL) has become one of the largest sterile injectable drug makers in the world, having closed its buyout of Agila Specialties from India's Strides Arcolab. The deal did have a hitch, however, after the FDA issued a warning letter to one of Agila's plants. Mylan said it was holding back $250 million until the regulatory issues get resolved.

The company said it has regained full commercialization rights for most of Agila's U.S. portfolio, both products already on the market as well as in the pipeline, and is taking back rights to many of its products in Canada, Australia, Brazil, Japan and South Korea.

The Agila acquisition is only one of a number of deals the drugmaker has made this year to expand its reach, but it makes Mylan one of the largest players in a growing area. CEO Heather Bresch said she expected significant expansion from the pair-up as Mylan accelerates "the many untapped opportunities we see ahead."

Mylan President Rajiv Malik broadly addressed the plan, saying the generic drugmaker intends to launch more than 800 injectable products over the next 5 years, 150 of those in the U.S. The company now has 1,200 approved injectable products globally and more than 900 pending approvals worldwide. The company had to agree to sell off 11 products in markets where U.S. regulators believed the deal would harm competition.

The deal also significantly expands Mylan's sterile injectable infrastructure with four dedicated R&D facilities staffed by more than 400 scientists and 13 manufacturing sites across 6 countries. Agila contributed 9 manufacturing facilities in India, Brazil and Poland, 8 of which the FDA has approved.

The regulatory issues Strides faces were outlined in an FDA warning letter the company received in September. It chastised the Indian plant for using defective gloves in the aseptic processing area and then not taking the problems seriously enough. Agila has insisted it is on top of the concerns and will get them resolved quickly.

Bresch has been looking for other ways to boost growth. Last year, along with Ranbaxy and Strides, the company inked a deal with Gilead Sciences ($GILD) to help increase production and lower costs of its HIV-fighting drugs in developing countries. It also formed a partnership with Pfizer ($PFE) to produce branded generics in Japan, with up to 350 off-patent drugs in the mix. Mylan and its biosimilars partner Biocon just got approval in India to make their own version of Roche's ($RHHBY) cancer drug Herceptin. The company's third-quarter earnings were off, with a 25% drop in net profit and a 2% falloff in sales for its third quarter. But analysts seemed to think it was an anomaly and took Bresch at her word that the company will be growing again next year.

- here's the release

Special Report: Top 10 generics makers by 2012 revenue - Mylan