Watson Pharmaceuticals ($WPI) expanded its reach in the Asia-Pacific with a deal to buy Strides Arcolab's Australia-based generics business, which is known as Ascent Pharmahealth. The buyout not only gives Watson a major presence in Australia, where it becomes the fifth-largest copycat drugmaker, but it also vaults Watson to No. 1 in Singapore and brings a web of commercial operations in Hong Kong, Vietnam, Malaysia and Thailand to boot.
Analysts called the deal a win-win for Watson and Strides, because it gives the Indian drugmaker enough cash to cut its debt by $250 million. Plus, Strides can further center its efforts on injectables and specialty meds, as it's been aiming to do. "We have been clear about our intention to focus on our highly attractive steriles segment, which we expect to be our growth engine going forward," Strides chief Arun Kumar said in a statement.
For Watson, the buyout fits into its newly announced ambition to further build up its generics business via acquisitions. At the J.P. Morgan Healthcare Conference earlier this month, CEO Paul Bisaro said he was aiming to make some buys, possibly some large ones, to augment the company's already sizable reach in copycat meds. "We are committed to expanding our international commercial operations into geographies where we can capitalize on our existing assets and participate in growing and emerging markets," Bisaro said in a statement.
Meanwhile, Watson reported a 39% increase in earnings, aided by the launch of some new products, including the generic version of Johnson & Johnson's ($JNJ) ADHD drug Concerta--and, of course, its authorized version of the Pfizer ($PFE) cholesterol-fighter Lipitor, which launched Nov. 30.