Mylan to get Strides' vast sterile injectable capacity

Manufacturing problems with sterile injectables at Hospira ($HSP), Ben Venue and elsewhere have exacerbated drug shortages over the last few years, while giving an opening to smaller players that can flll in the gaps.

But the market for injectables, particularly generics, is taking on a new hue. Generic drugmaker Mylan ($MYL) will buy the sterile injectables business of Indian drugmaker Strides Arcolab and pick up its vast manufacturing capacity.

Mylan will pay Strides $1.6 billion and up to $250 million more if the unit, Agila Specialties, hits certain goals, it said Wednesday. The deal makes Mylan one of the largest injectables companies in the world and enhances its manufacturing network at a time when the market is growing and the key player in the U.S., Hospira, continues to struggle.

Agila has 9 manufacturing facilities in India, Brazil and Poland, 8 of which have been approved by the FDA. Its products include vials, prefilled syringes, ampoules, lyophilization, cytotoxics, and antibiotics. Strides has one of the the largest steriles capacities in India and one of the largest freeze-drying capacities in the world. Mylan already had a sterile manufacturing plant in India, as well as one in Ireland.

The company said it believed the time was right to expand its injectables business because the global generic injectables market will see compound growth of 13% through 2017 as a host of injectable drugs come off patent. The combined operations will have more than 700 injectable products and a pipeline of 350 more. Agila also has a presence in some growing markets like Brazil that Mylan covets. The deal is expected to close in the fourth quarter of 2013.

The key player for generic injectables in the U.S. market is Hospira, but it has for several years been dealing with problems at several U.S. plants. It has spent $375 million to upgrade facilities, and the FDA is back in its Rocky Mount, NC, plant for an inspection that it hopes will lead the agency to give it a passing grade. Still, this week it had to recall 5 drugs for a variety of problems.

The shortage of some key sterile injectable drugs, including some cancer drugs, has opened the door to a number of smaller players which have bumped up their earnings by filling the gaps. Still, all of this market uncertainty should provide significant opportunity for Mylan. 

- here's the release

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