Lannett Snaps Up Competitor Silarx for $42 Million, As Dealmaking Booms

Published: May 21, 2015

Ex-Pfizer Exec Lands a New Gig at Startup
May 21, 2015
By Riley McDermid, Breaking News Sr. Editor

Northeast Philadelphia generic drug company Lannett Company, Inc. will buy privately held Silarx Pharmaceuticals Inc and its real estate portfolio for $42 million in cash, as dealmaking in the generic drugmaking sector continues to soar.

There’s been over $92.5 billion of U.S. healthcare merger activity already in 2015, as healthcare and biotech have boomed over the last 13 months. Executives at all these companies have scrambled to keep up with the 73 percent more M&A activity this year, which has already seen more than 245 deals.

“The acquisition will add a high quality, talented research team and manufacturing capacity,” said Arthur Bedrosian, the chief executive of Lannett, in a statement. As part of the package, Lannett will get Silarx’s new 110,000-square-foot manufacturing facility and headquarters in Carmel, NY. The deal is slated to close in June and there will be no layoffs, said Bedrosian.

“In addition, although the acquisition is not expected to have a significant impact on our financial results of operations during the next twelve months, Silarx brings an exciting pipeline and a number of complementary products to our offerings,” Bedrosian said.

Lannett will now add 50 workers at the New York plant, an increase from its current 400 employees, including 285 in Philadelphia.

The deal is just the latest in a string of mergers and acquisitions that have remade the face of the generic drugmaking industry, as biotech’s bull market continues and companies go shopping for smart “bolt-on” deals. So far, that’s included Dublin-based Endo Pharmaceuticals ’s buy up of Par Pharmaceutical, Inc. for $8 billion, Sun Pharmaceutical Industries Ltd. $3.2 billion acquisition of Ranbaxy Laboratories, and Teva Pharmaceutical Industries Ltd. ’s (so-far) frustrated attempts to acquire Mylan Pharmaceuticals, Inc. , which is itself targeting smaller generic drugmaker Perrigo Company .

But there’s a reason larger suitors are more likely to buy a smaller competitor lock, stock and barrel, say experts.

"It takes a long time for Teva, Lannett or any of the generics companies to get a new branded product into the market, adding to their revenues," University of Michigan business professor Erik Gordon told Philly News. "The quickest way to boost revenues is to buy another company and its revenues. In generics, size matters because you can win more bids with large pharmaceutical benefits managers and other big buyers of pills. Adding revenues of $2 to revenues of $4 can end up producing $8 of revenue."

Will Mylan Buy Teva, As Predator Becomes Prey?
The complicated three-way takeover waltz being conducted between Pittsburgh, Penn.-based Mylan Inc., Israeli company Teva Pharmaceutical Industries Ltd. and Perrigo Company took another weird turn last week, after Mylan said that while it still views Teva’s unsolicited $40.1 billion bid as too low, it might want to acquire Teva itself eventually. Mylan Chairman Robert J. Coury made it clear that if Mylan is able to cement its deal with Perrigo, it might go shopping again—and this time to buy Teva, not be bought. With dealmaking heating up in 2015, we wanted to know your thoughts: Will perennial predator Teva wind up being prey?

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