Novartis AG Reportedly in Talks to Buy New Jersey's Amneal, Deal Could be Worth $8 Billion

Published: Nov 15, 2016

Novartis AG Reportedly in Talks to Buy New Jersey's Amneal November 14, 2016
By Mark Terry, Breaking News Staff

Rumors are spreading that Novartis AG is in talks to buy Bridgewater, NJ-based Amneal Pharmaceuticals. Depending on the structure of the deal, Amneal could be valued at as much as $8 billion.

Amneal was founded in 2002 by Chintu and Chirag Patel. It is currently the seventh-largest generic manufacturer in the U.S. It has more than 4,000 employees with offices in Australia, Europe and Asia. It is a private company.

Bloomberg wrote, “Europe’s second-biggest drugmaker by sales (Novartis) has signaled its interest in deals as speculation mounts that it’s weighing a potential sale of its share in crosstown rival Roche Holding AG. Beyond its focus on late-stage cancer or pharmaceutical assets, Novartis may also consider purchases that could strengthen its generics unit, Chief Executive Officer Joe Jiminez said in an interview last month.”

Specifically, Jimenez said, “If we were able to locate, let’s say, differentiated generics that would strengthen Sandoz’s position in certain geographies, that would be another priority.”

Novartis has also said it is considering a sale of its Alcon eye care division. Novartis acquired Alcon from Nestle in a series of deals that totaled $51 billion. But Alcon has had its problems, which Novartis blames on lack of innovation and inconsistent customer service.

“Alcon has not developed over the past two years as we had expected,” Joerg Reinhardt, Novartis’s chairman, said in a Sunday interview. “In the long run, the question arises as to whether we are the best owner for Alcon.”

A purchase of Amneal would be a “bolt-on” acquisition, and consistent with what Novartis has said recently regarding its M&A strategy. If Novartis did pick up Amneal, it would solidify Sandoz as the third-largest generics company in the U.S.

Amneal’s most recent news was the launch of the first Vagifem generic, called Yuvafem (estradiol vaginal inserts). The product is used to treat vaginal symptoms of menopause, including dryness, itching and irritation.

“Patients and healthcare providers have been eager to see a generic for this unique dosage-form in order to benefit from the cost savings such multi-source products can deliver,” said Chirag Patel, the company’s co-chief executive officer and chairman, in a statement. “As a company, we are not only pleased to be able to offer a potentially more affordable option in this therapeutic category, but to add to our rapidly-growing portfolio of oral contraceptives and hormone replacement therapies in such a significant way.”

Novartis announced that its PKC 412 won priority review by the U.S. Food and Drug Administration (FDA). The drug, midostaurin, is being tested against newly diagnosed FLT3-mutated acute myeloid leukemia (AML) and advanced systemic mastocytosis. If approved, analysts have projected peak annual sales in the hundreds of millions by 2020.

“FLT3-mutated AML and advanced SM are devastating and rare diseases, with significant unmet needs due to limited existing treatment options,” said Bruno Strigini, head of Novartis Oncology , in a statement. “This regulatory designation signifies the importance of midostaurin as a potential therapy for these patients who haven’t had the benefit of targeted medicines.”

Novartis is currently trading for $71.91. Although it had taken a jump around the election, trading for $74.07 on November 10, trends have been generally downward since July 22, when shares traded for $83.51.

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