Shopping for an Indian drugmaker? Strides Arcolab may have a deal for you. As Bloomberg reports, Strides is apparently considering the sale of its injectables unit, Agila Specialties. Price? Well, its market value is about $800 million right now, the news service's sources figure, but the price tag could be upwards of $1.6 billion.
Strides wouldn't talk to Bloomberg about the possible deal. Last fall, the company's managing director suggested that he'd be open to selling another unit that makes pills and capsules, to focus on growing Agila, where margins are higher.
If there is a deal, here's why Agila could attract buyers: injectables aren't so easy to make, and Agila has a nice track record of winning approvals for its new products. Plus, many of the drugs running short in the U.S. these days--in part because of manufacturing glitches--are injectable generics. Agila might be able to step in where others have dropped out.
Plus, Agila already has supply deals with GlaxoSmithKline ($GSK) and Novartis ($NVS), Bloomberg reports. Strides supplies generics to Pfizer ($PFE) for the U.S. market, via a 2010 partnership. And its manufacturing network has been growing; in April, it bought a plant from Star Drugs and Research Labs.
And then there's the fact that consolidation in the generics business is well under way. Companies are looking to bulk themselves up to compete. Big deals, such as Watson Pharmaceuticals' buyout of Actavis, aren't the only action. Smaller firms are also joining forces. And injectables companies are selling; Mylan, for instance, bought Bioniche Pharma for $550 million in 2010.
Agila's sales are on the rise, too. The company posted 10.2 billion rupees in revenue last year, or about $185 billion, and analysts figure it could hit about $350 million by next year. Valued at 4-5 times sales, Bloomberg figures, Agila would be worth about $1.6 billion.
- see the Bloomberg story
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