Amneal buying AvKare, drugmaker to the feds 

Chirag Patel and Chintu Patel, co-founders of Amneal, regained control of the company in August. It has now struck a deal for AvKare, known as R&S Northeast, which sells private label drugs to the federal government that it sources through 50 vendors. (Amneal)

Just months after a C-suite shakeup at Amneal, the generics company has struck a $220 million deal that will not only fill capacity and boost its generics business but is set to disrupt the contract manufacturing market. That is because it is buying a majority stake in AvKare, which sources the private-label drugs it sells the government through dozens of contractors. 

Amneal says it is buying a 65.1% stake in the Fountain Run, Kentucky-based business which will become a standalone subsidiary of Amneal. It says the deal sets the enterprise value of AvKare at $340 million. AvKare does business as R&S Northeast. 

AvKare sells its own private label generic drugs primarily to the Departments of Defense and Veterans Affairs. It buys most of those from more than 50 vendors. 

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Amneal founders Chirag Patel and Chintu Patel said the deal is in line with the strategy they set out for the company when the re-joined Amneal as Co-CEOs in August. It opens up new markets, allowing it to use its manufacturing network to produce drugs for the growing federal government market, the Patels said in a statement attributed to both. 

“While we remain extremely focused on organic growth, we also recognized that M&A would be a key element of our growth story, and that we would pursue the right opportunities that strategically fit our business,” the statement says of the Bridgewater, New Jersey-based Amneal.  

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The brothers returned to running the struggling generics maker in August after the board ousted Paul Bisaro, Amneal’s executive chairman, and Rob Stewart, the president and CEO who followed Bisaro from Allergan. Bisaro, who had a record of building generics companies through M&A, was running Impax Labs when it bought Amneal in 2017 for $6.4 billion. 

But the beefed-up company, which has a portfolio of more than 300 drugs, floundered as the U.S. generics market softened. Its stock price dropped from a high of $24.25 per share in August 2018 to $3.08 when Bisaro was shown the door. Shares closed Tuesday at $3.50, down 1.69% after the news of the AvKare deal.