Mylan to pay $550 million in cash for Irish drug firm Bioniche

Acquisition said to satisfy a long-standing objective of filling product and therapeutic gaps in the company 's injectable drug portfolio in North America

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CANONSBURG, Pa.—Mylan Inc. has reported that it will shell out $550 million in cash to acquire  privately held, Galway, Ireland-based Bioniche Pharma Holdings Ltd., a move that ironically will help U.S.-based Mylan gain entry into a North American market—the injectable drugs market, to be precise.

Bioniche reportedly generated some $130 million in net revenue for the one-year period that ended May 31, about $43.5 million of that in the three-month period that concluded May 31. Most of these sales were in the United States, and Bioniche's manufacturing and sales portfolio cuts across several therapeutic areas—particularly for the hospital setting—including analgesics, anesthetics, orthopedics, oncology and urology.

In addition to boasting more than 30 products on the market, Bioniche has 15 Abbreviated New Drug Applications that are pending approval from the U.S. Food and Drug Administration and more than 25 other products are in various stages of development. According to an analyst note from Zacks Equity Research, "These products will help drive top- and bottom-line growth."

Bioniche focuses on injectable drugs that are considered challenging both to develop and produce, and Mylan plans to combine Bioniche Pharma with its own unit dose business, UDL Laboratories. In so doing, the company plans to form a new hospital or institutional business unit called Mylan Institutional, which will be a part of the company's North American generics segment.

The acquisition "satisfies one of our long-standing objectives of filling product and therapeutic gaps in our U.S. portfolio, says Heather Bresch, president of Mylan.

For his part, Mylan's chairman and chief executive, Robert Coury, notes that Bioniche is in a high-growth, high-margin business and "has maintained a long-held strategy of focusing on quality injectable products with limited competition and difficult-to-develop-and-manufacture compositions."
Mylan Institutional will focus on hospital and institutional markets, where Mylan will offer its products to group purchasing organizations, wholesalers, hospitals, surgical and radiology services, home infusion and retail areas, say analysts with Zacks, which currently maintains a "neutral" recommendation on the purchase of Mylan stocks, despite the fact the acquisition deal gives Mylan a direct entry into the North American injectable drugs market.

"The company holds immense potential in the generics market, as many blockbuster drugs are slated to lose patent exclusivity in the forthcoming years," Zacks analysts note. "However, we remain concerned about the high debt burden of the company, for the repayment of which Mylan issued $1 billion of senior notes recently."

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