Teva’s massive agreement to buy Allergan’s generics business continues to ripple its way through the industry. Australia’s Mayne Pharma has scooped up 42 products from the two companies, which are intent on winning antitrust clearance for their $40.5 billion deal.
Though smaller in size, Mayne's $652 million buy is no less transformative for the company than Teva's deal for Allergan. The Australian firm will leap 50 spots in the U.S. generics scene into the top 25 biggest players.
With its sights set squarely on U.S. generics growth, Mayne will buy 37 marketed generics plus 5 under review at the FDA. The transaction is “expected to be very significantly accretive” to Mayne’s fiscal 2017 EPS and add more than $237 million in sales next year at margins higher than 50%, the company said.
As part of the deal, Mayne will transfer production of up to 11 products to its plants in Greenville, NC, and Salisbury, South Australia, making quick use of “existing and previously announced” investments in hopes of growing margins over time. Just two weeks ago, Mayne unveiled $25 million in planned improvements at its Salisbury site, in part to provide more capacity for its Doryx acne brand.
While not disclosing specifics of the Teva-Allergan portfolio it's buying, Mayne said the product lineup boasts high market shares and few competitors. The company believes it can push future growth by "leveraging existing relationships with customers and suppliers.” It’s bulked up in its management ranks to handle the growth.
The products will take Mayne from the 75th largest U.S. generics player to the 25th, the Sydney Morning Herald reported. In fact, one of the unapproved drugs included in the buy could launch before the end of the year, with sales forecasts for that med alone at $340 million annually.
“We see great growth opportunities for our US business,” CEO Scott Richards told the newspaper. “We are not interested in Asia or Europe. In the US we’ve got critical mass there now."
Tuesday’s acquisition comes as Teva works aggressively to close a $40.5 billion deal for Allergan’s generics stall, shedding products as mandated by the FTC along the way. Once expected to wrap up by the first quarter of this year, the acquisition has hit some speed bumps, but a Monday note by Bernstein’s Ronny Gal said some industry sources have called a potential close by mid-July a “very fair” estimate.
Since it announced its megadeal a year ago, the Petah Tivka-based generics giant has divested 18 drugs to Hayward, CA’s Impax Laboratories for $586 million, 5 unapproved meds to Schaumburg, IL-based Sagent Pharmaceuticals, and 8 more drugs to India’s Dr. Reddy’s Laboratories for $350 million.
Absent from the action, though, has been Mylan, which analysts predicted would take advantage of the sales following its unsuccessful Perrigo pursuit. So far, though, it’s looked elsewhere, paying $7.2 billion for Sweden’s Meda and $1 billion for topical skin treatments from Renaissance Acquisition Holdings.
Mayne’s close is expected to coincide with the Teva/Allergan closing, the company said. It’ll fund the purchase through extending a current debt arrangement and an equity raising on the Australian Securities Exchange.
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