Bay Area's IMPAX Labs Plunks Down $586 Million for a Chunk of Teva and Allergan’s Generics Portfolio

June 21, 2016
By Mark Terry, BioSpace.com Breaking News Staff

As part of the divestiture process required by the U.S. Federal Trade Commission (FTC) in regards to Israel-based Teva Pharmaceutical Industries ’s acquisition of Dublin-based Allergan ’s generics business, Hayward, California-based IMPAX Laboratories is buying a portfolio of generic drugs from the two companies for about $586 million.

The complete take on the deal with be 15 currently marketed generic drugs, one approved generic product, two approved strengths of a currently marketed product that haven’t launched yet, one pipeline generic drug and one pipeline strength of a currently marketed drug, both pending U.S. Food and Drug Administration (FDA) approval.

It also includes commercial rights to Impax’s pending abbreviated new drug application (ANDA) for the generic version of Concerta (methylphenidate hydrochloride), which was previously partnered with Teva, and one generic drug that is currently under development.

“The anticipated acquisition of these currently marketed and pipeline products fits with our strategic priorities of maximizing our generic platform, optimizing research and development and accelerating business development to create long term growth,” said Fred Wilkinson, president and chief executive officer of Impax, in a statement. “Through this transaction, we will be expanding our portfolio of difficult-to-manufacture or limited-competition products and maximizing utilization of our existing manufacturing facilities in Hayward, California and Taiwan. The acquisition of full commercial rights to generic Concerta provides an additional opportunity to add another valuable near term launch and accentuates the strength of our internal research-and-development program.”

The products acquired created about $150 million in net sales and about $100 million in gross profit in 2015. According to IMS Health , the products that are pending or in development pipelines are projected to have U.S. brand and generic sales in the 12-month period ending in March 2016 of $3.1 billion. The 15 marketed products are expected to deliver about $80 million in revenue to Impax in the second half of this year.

Earlier this month, Teva and Allergan sold eight generic drugs to India’s Dr. Reddy's Laboratories for $350 million. They also sold five abbreviated new drug applications to Sagent Pharmaceuticals for about $40 million.

Impax also updated its 2016 financial guidance, indicating that total revenues increased at least 15 percent over the full 2015 fiscal year, and adjusted gross margins as a percent of total revenue were expected to be in the low 50 percent range. Overall, instead of a 10 percent increase in profits, it expects a 20 percent increase. Thomson Reuters polled analysts, who had predicted 9 percent growth.

“We are excited about the opportunity to create long-term value and efficiently deploy our strong balance sheet,” said Wilkinson in a statement. “Following the completion of this acquisition, we will continue to have an efficient capital structure with our net debt to trailing 12 months adjusted pro-forma EBITDA ratio of approximately 2.1 times. We will be well positioned to continue to invest in organic growth as well as judiciously pursue strategic business development and merger and acquisition opportunities that can strengthen our portfolio and create long-term stockholder value.”