Actavis ($ACT) has been looking to unload some of the 28 plants picked up in its merger with Watson Pharmaceuticals. And India's Aurobindo has declared its intention to significantly expand its sterile injectable business over the next couple of years. To some it sounds like a match made in corporate heaven.
Sources tell The Economic Times that Aurobindo is talking with Actavis about buying active pharmaceutical ingredient (API) plants in Western Europe that it could integrate into its sterile injectables operation. They said Actavis is looking to sell facilities in Italy, Spain, France, Germany and the Netherlands, and the Indian drugmaker is looking to scoop up a couple of them, the newspaper reports.
Aurobindo likes the sterile injectables business, and in an effort to realize all of its potential, the company last year spun its sterile injectables operations into a separate subsidiary. It also asked a committee of independent directors to explore "strategic alliances and acquisitions" for the new operation. The company got approval last year to spend nearly $8 million to buy a 60% stake in a new sterile injectable manufacturing facility that Celon Laboratories is building. Some of the money is going toward expansion. The facility is slated to make hormonal and oncology drugs.
When Actavis and Watson Pharmaceuticals merged in 2012, CEO Paul Bisaro said he intended to cut about $300 million in costs to help pay for the deal. Selling or closing excess manufacturing capacity was key to that plan. The drugmaker announced in November it would close a manufacturing facility in Lincoln County, NC, this year. It is shifting prescription drug making to a facility in Salt Lake City, UT, and contracting out the over-the-counter drug production the plant had been doing. The final closing is slated for mid-year 2015 and 310 will be let go by then.
- here's the Economic Times story