The arms race by drugmakers to buy or build up sterile injectable firepower continues. Par Pharmaceuticals will pay $490 million to pick up JHP Pharmaceuticals, paying two-and-a-half times what Warburg Pincus laid out for the sterile injectable drug producer last year. The deal was announced Tuesday, days after India's Aurobindo said it would buy 7 API plants from Actavis, in part to boost its sterile injectables operations.
JHP Group Holdings, parent of the pharma operation, was founded in 2007 expressly to mine the $30 billion U.S. sterile injectable drug market. It is based in Woodcliff Lake, NJ, but its 171,000-square-foot manufacturing plant is in Rochester, MI, where it makes 14 specialty injectable drugs. Par also gets a pipeline of another 34 injectables in the deal, 17 of which have been submitted to the FDA for approval. Most of JHP's work is for clients, but it does have some products of its own. "The acquisition of JHP immediately expands Par's presence into the rapidly growing market for injectables," CEO Paul Campanelli said in a statement.
A year ago, Warburg Pincus laid out $195 million for JHP, the majority of which was owned by Morgan Stanley Principal Investments. JHP management maintained an ownership position. Par said in an SEC filing that it expects its deal with Warburg Pincus to close this quarter. Warburg looks to pick up a $30 million termination fee if the deal does not get approved and completed.
Sterile injectable drugs are expected to make up an accelerating piece of drug sales, and a number of generic drugmakers have been looking to expand into the market. Last year, Mylan ($MYL) agreed to pay $1.75 billion to get Agila Specialties, the injectables business of India's Strides Arcolab. Several days ago, India's Aurobindo said it would pay €30 million ($41 million) to buy 7 Actavis ($ACT) active pharmaceutical ingredient (API) facilities across Western Europe, in part to expand its sterile injectables business. Other companies have also gotten into the injectable drug business, seeing opportunities as some of the larger players like Hospira ($HSP) and Boehringer Ingelheim ran into manufacturing setbacks. At the end of last year, Boehringer closed its U.S. sterile injectables operation, which was operating under an FDA consent decree, rather than face ongoing operating losses for the facility.
- here's the Par announcement
- more details are in an SEC filing