Acquisition is par for the course
Par Pharmaceutical acquires rival Anchen Pharmaceuticals for $410 million
If approved, Par will pay the acquisition price of $410million, and is expected to reap the rewards of the Irvine, Calif.-basedcompany's extended release and niche generic products and other assets as earlyas year's end.
The transaction is expected to be immediately accretive tonon-GAAP earnings in 2011, Par executives announced at a conference call heldfor investors and the media on Aug. 24.
With Anchen onboard, "our new portfolio is expected togenerate significant and positive future cash flow, including more frequentproduct launches every year," Campanelli said in the call. "We look forward toAnchen launching from eight to 10 new products within the next two years whichwill contribute significantly to Par's revenues and gross product."
Par plans to finance the Anchen acquisition in part with a$350 million bank loan, to be repaid over five years with an adjustable ratethat is expected to average around 5 percent, according to Michael A. Tropiano,Par's chief financial officer.
Anchen is described as a profitable, fully integratedpharmaceutical company with five commercialized products including genericforms of the well-known drugs Cipro, Wellbutrin and Ambien.
The California pharma has 27 abbreviated new drug approvals(ANDAs) on file with the U.S. Food and Drug Administration (FDA)—five of whichare believed to be first-to-file —and approximately 26 additional products indevelopment, according to Par.
Founded in 2002, Anchen has 218 employees and more than72,000 square feet of expandable manufacturing and warehouse facilities, withstate-of-the-art equipment.
J.B. Davis, senior vice president at Anchen, deferred allquestions about the acquisition to Par.
Anchen has demonstrated sound management in all aspects ofits operations, including its legal department, which has handled patentchallenges, said Campanelli.
"Par has been evaluating Anchen for more than a year, and inthat time, we have developed a very deep understanding of the organization, itsassets and its culture," Campanelli said.
Campanelli stated during the conference call that it is tooearly to say whether all of Anchen's employees would be kept on.
After searching for the ideal acquisition for some time, Parbelieves it got it right.
"Anchen is the one we wanted and a terrific acquisition forPar Pharmaceuticals," Patrick G. LePore, chairman, CEO and president of Par,told investors. "I can't wait to work with the people from California.
"This transaction accelerates the expansion of Par'sresearch and development infrastructure and reinforces our strategy to providelong-term sustainable growth," LePore added. "Anchen has an excellentdevelopment track record and robust product pipeline, which, when combined withPar's existing capabilities and pipeline, more than doubles our productopportunities. Anchen also shares Par's highly entrepreneurial culture andcost-efficient approach to product development, which should allow for aseamless integration."
Par made a deal for another small generics company in May,agreeing to acquire India-based Edict Pharmaceuticals for up to $37.6 million.The company expects the deal to close by the end of the year and add toearnings in 2013.
Par has also been moving into the branded pharmaceuticalmarket by developing updated versions of off-patent drugs.
Par has two operating divisions, Par Pharmaceutical andStrativa Pharmaceuticals, which develop, manufacture and market generic drugsand proprietary pharmaceuticals.
Par announced earlier this summer that it plans to cut 100jobs—about 15 percent of its workforce of 600—in the Strativa division.
At that time, LePore said the company planned to focus ontwo Strativa products: Megace, which treats appetite loss and weight loss,especially in AIDS patients; and Nascobal, a vitamin B-12 nasal spray. Strativaalso makes Zuplenz, an anti-nausea drug aimed at cancer patients undergoingchemotherapy or radiation, and Oravig, an anti-fungal medicine. Besides itsheadquarters in Woodcliff Lake, the company has locations in Suffern, SpringValley and Hauppauge, N.Y.
Par Pharmaceuticals conducts manufacturing in the UnitedStates and markets and/or licenses more than 85 prescription drug product. Paralso has more than 50 currently marketed products, more than 30 products inactive development and manufacturing plant capability of more than 2 billiontablets per year.