Aurobindo Pharma acquires Sandoz’s dermatology, oral solid business in US for $900 million

New Delhi: Drug major Aurobindo Pharma has entered into an agreement to acquire commercial operations and three manufacturing facilities in the U.S. from Sandoz Inc., a Novartis generic division, for $900 million.

The acquisition, which includes the dermatology and oral solid businesses of Sandoz in the U.S., has been done in an all-cash basis, without taking in any cash or debt from the acquired business, according to an exchange filing by the company yesterday. The deal will be financed through debt.

The Sandoz US portfolios to be sold to Aurobindo include approximately 300 products, as well as additional development projects. The sale includes the Sandoz US generic and branded dermatology businesses as well as its dermatology development center. As part of the transaction, Aurobindo will acquire the manufacturing facilities in Wilson, North Carolina, as well as Hicksville and Melville, New York. The business had net sales of USD 0.6 billion in H1,
2018.

“Sharpening our portfolio focus in the US allows us to devote more time and resources toward our strategy of bringing complex generics, value-added medicines and biosimilars to patients in the US, creating higher value and opening up access to important medicines where alternatives are truly needed,” says Richard Francis, CEO Sandoz and Member of the Novartis Executive Committee. “Through this transaction, we are refocusing our business but also striving to ensure continuity of supply of important long-used generic medicines for patients and customers in the US.”

The acquisition announced is in line with the company’s strategy to grow and diversify business in the U.S., said N. Govindarajan, Managing Director of Aurobindo Pharma. “Acquiring these businesses from Sandoz will allow us to further expand our product offering and to become a leading player in the generic dermatology market.”

As part of the agreement, approximately 750 employees in Hicksville, Melville, Wilson and Princeton, New Jersey, as well as the field representatives for the PharmaDerm branded dermatology business, are expected to transfer to Aurobindo upon closing. “We recognize that the transfer of ownership for a business of this size is a complex process, and we are aware that it may create some uncertainties for our associates in the US. It is thus a priority for us to make the transition as clear and quick as possible”, says Carol Lynch, President of Sandoz Inc. and Head of Sandoz North America.

Jefferies acted as exclusive financial advisor to India-based Aurobindo in its $1 billion acquisition of the U.S. dermatology and solid orals portfolio of Sandoz Inc from Switzerland-based Novartis. This deal is Jefferies’ 20th advisory transaction for Indian pharma/healthcare clients since 2012, ranking the firm as the top advisor to Indian pharma and healthcare companies. This transaction also reinforces Jefferies’ market leading track record of advising generic and specialty pharma companies in mergers and acquisitions.

Following the transaction, the Sandoz US portfolio will continue to be substantial, and will include biosimilars, value-added medicines and complex generics such as injectables, respiratory and ophthalmics. Sandoz will continue to focus its clinical development, business development and investment efforts on these areas.

The transaction is expected to close in the course of 2019 following the completion of customary closing conditions.