Valeant adds to skin-care quiver with $475M PreCision Dermatology buy

Valeant Pharmaceuticals ($VRX) has snapped up another dermatology specialist in its ongoing quest to build its business in the field. This time, it's PreCision Dermatology, a Cumberland, RI-based maker of prescription skin remedies and skin-care products sold by physicians. Valeant will hand over up to $500 million for the company, with $475 million cash up front and a $25 million milestone payment.

Valeant CEO J. Michael Pearson

PreCision "should bring tremendous value to Valeant's medical dermatology portfolio," CEO Michael Pearson said, adding that its products "[enjoy] high physician loyalty, premium product quality and lifecycle management opportunities that will enhance our future growth strategies."

Valeant has been in dealmaking mode since it was born from the merger of Biovail and the much smaller Valeant Pharmaceuticals in 2010. Pearson targeted growth in dermatology back in 2011, and along the way snapped up Sanofi's ($SNY) Dermik unit, Janssen Pharmaceuticals' skincare business, the skin-drug specialist Medicis, and the boutique skin-care company Obagi, among others. The company has also struck skin-drug partnerships with Actavis ($ACT), to settle patent disputes on several of its dermatology brands.

PreCision is expected to bring in about $140 million in sales this year, Valeant said, with such products as the hydrocortisone lotion Locoid; the eczema and keratosis treatment Hylatopic; the topical antibiotic Clindagel; and the acne remedy BenzEFoam. The company's Onset Dermatologics unit handles its prescription drugs, while PrecisionMD markets skin products sold in doctors' offices.

Valeant isn't the only company looking to dominate in dermatology. Novartis's ($NVS) Sandoz unit has built up its own specialty in the field, with the help of its 2012 buyout of Fougera. GlaxoSmithKline ($GSK) beefed up its business in the field with the $2.9 billion purchase of Stiefel Laboratories in 2009. More recently, Spain's Almirall nabbed U.S.-based Aqua Pharmaceuticals to pump up its own dermatology offerings. But as Pearson has pointed out, the skin-drug business is full of small players ripe for buyout. Plenty more dermatology deals are yet to come.

- read the Valeant release

Special Report: Top Biopharma M&A Deals - 2012