Novartis now top dog in skin drugs with $1.5B Fougera buy

Another day, another deal. Novartis ($NVS) has snapped up Fougera Pharmaceuticals, a U.S.-based maker of generic skin treatments, for $1.5 billion. The buyout will make the Swiss company's generics unit, Sandoz, the dominant player in dermatology knockoffs--and will add to Novartis' top line at a crucial time.

Novartis' top drug, Diovan, loses market exclusivity later this year, putting the company in line for a billion-dollar hit to sales. New drugs such as the multiple sclerosis treatment Gilenya can help somewhat, but M&A is another key part of the strategy for pumping up revenue. "Certainly generic pharmaceuticals is a very good way, in these cost-conscious times, to make up revenue," Miller Tabak portfolio manager Les Funtleyder told Bloomberg.

Fougera makes 17 branded products and 45 generics, and adding these to Novartis' stable will push Sandoz's dermatology revenues to $620 million. And as The Financial Times notes, a growing number of skin drugs are going off patent, giving the combined company opportunities to significantly expand its offerings. The U.S. market in generic dermatology is about $2.1 billion right now, and it's been growing quickly, Novartis says.

Sandoz sees the Fougera deal as a springboard for international dermatology growth, too. As Sandoz chief Jeff George told the FT, "We see great potential to take a business that's a US business and take it globally."

- see the release from Novartis
- read the FT piece
- get more from Bloomberg