Akorn buys Hi-Tech for $640M to tap manufacturing expertise

Chicago-area drugmaker Akorn has a lot of financial reasons to buy Hi-Tech Pharmacal. Hi-Tech is among the fastest growing generic drugmakers and the combo will boost Akorn's revenues to more than $500 million. It also will add immediately to earnings. But there is a manufacturing angle in the buy as well: Hi-Tech has manufacturing expertise that Akorn wants to get its hands on.

The acquisition of Hi-Tech will add branded cough and cold, nasals and topical OTC products to Akorn's existing TheraTears brand of eye care products, Akorn CEO Raj Rai said when announcing the deal today. "We also plan to capitalize on the manufacturing capabilities of Hi-Tech to further expand our presence in the private label OTC business," he added.

Hi-Tech, of Amityville, NJ, specializes in difficult-to-manufacture liquid and semi-solid dosage forms and produces a range of sterile ophthalmic, optic and inhalation products, including OTC products for the diabetes marketplace. Akorn specializes in sterile ophthalmic and injectables and has finished dose manufacturing facilities in Decatur, IL, Somerset, NJ and Paonta Sahib, India.

Akorn said it expects that within a year after the deal closes, the combined company could see between $15 million and $20 million in annual run-rate synergies. It didn't say anything about where those would be found.

While the combined companies will remain small players in the generic drug business, the deal continues what has been a steady string of buyouts as the generics and OTC markets consolidate. A couple weeks ago, German drugmaker Stada Arzneimittel announced a €259 million deal to buy British OTC company Thornton & Ross. CEO Hartmut Retzlaff last year said that his company needed to bulk up with some deals or risk being gobbled up itself in the rapidly consolidating generics business.

- here's the announcement

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