7. Fresenius Kabi

Pills

Fresenius Kabi
Headquarters: Bad Homburg, Germany
2016 generic sales: $2.8 billion (estimate)

Fresenius Kabi, the generics arm of the Fresenius German healthcare group, managed to do something that many generic drugmakers struggled with last year—grow revenues in the U.S., about 4% in its case. And with big investments in its future, the drugmaker aims to strengthen its position going forward.

Fresenius Kabi's growth follows from the fact that the company primarily sells sterile injectable drugs. Because more and more biologic drugs have made their way to market, more and more of them are going off patent. That presents opportunities to companies with the expertise and facilities necessary to manufacture them. And because biologics are more complex, and so tricky to produce, FDA regulatory concerns often lead to recalls and production interruptions that trigger shortages, which offer up more opportunities and higher prices for those that get manufacturing right.

And Fresenius is placing even more bets on growth in that area going forward. Last year it announced plans to invest $250 million to turn a U.S. site into a showcase for its sterile injectable capabilities. Construction will begin this year on a decade-long, multiphase project to create a campus at its manufacturing operation in Melrose Park, Illinois.

Also last year, Fresenius picked up a 115,000-square-foot plant in Wilson, North Carolina. That plant, opened in 2010, was originally set up by BD Rx, the sterile injectables business Becton Dickson had started to boost its syringe manufacturing sales. With an agreement in hand to supply BD with a portfolio of intravenous solutions, the drugmaker is evaluating whether to continue to ship infusion products from Europe, or build or buy a plant in the U.S., CEO Stephan Sturm recently told investors.

Both of those deals were either done or underway when Sturm took the CEO role at Fresenius in July 2016. But the new CEO pulled off two significant deals recently, committing more than $5.4 billion to considerably expand the company's reach in sterile generics.

In April 2017, it reached a $4.75 billion agreement to buy U.S.-based generics maker Akorn. The deal, expected to close in early 2018, builds on Fresenius' strength in sterile injectables and expands Kabi into new segments such as ophthalmics and topical solutions.

On the same day, Fresenius announced plans to buy the biosimilars portfolio of Germany-based Merck KGaA for €170 million up front and up to €500 million in milestone payments, or about $729.2 million total. While a much smaller deal, the move provides an entry point for Fresenius in what is expected to be the next big market in off-patent drugs. One estimate says innovative biologics will lose $110 billion in sales to biosimilar copycats by 2025.

7. Fresenius Kabi