WOODCLIFF LAKE, N.J.—Par Pharmaceutical Companies Inc. announced recently that it has entered into a definitive agreement to acquire privately-heldEdict Pharmaceuticals, a Chennai, India-based developer and manufacturer of genericpharmaceuticals, for as much as $37.6 million in cash and Par's repayment of certainadditional pre-close debts.
Edict, a manufacturer of solidoral dosage generic pharmaceuticals with what Par calls "a highly-skilled research anddevelopment team and strong product pipeline" is focused on niche first-to-file,first-to-market formulations, and Par expects the transaction to be accretiveto earnings in 2013.
Edict currently has seven ANDAs filed with theU.S. Food and Drug Administration and one ANDA filed in the name of a development partner, along with another 14 products in development.
"This transaction enhances Par's already successful research anddevelopment infrastructure and demonstrates Par's intention to continue tobuild out our product development platform," says Paul V. Campanelli, president of Par Pharmaceutical. "Also, Edict's facility addssignificant operational capacity and provides business continuity protectionfor our Spring Valley, N.Y. facility."
Campanelli notes that Par has a long-standing relationship with Edict'sCEO, Muthusamy "Samy" Shanmugan, the two companies already having collaborated on numerous products at Parproducts.
Theacquisition is subject to customary conditions and approvals and should close by the end of this year if all goes according to current plans. . Par expects tocomplete the transaction by the end of the year.
The news follows a report more than two weeks earlier for the firstquarter of Par's fiscal year, ended March 31, 2011, in which the company cited total revenues of $233million and a gross margin of $109.7 million. There was a net loss fromcontinuing operations of $108.8 million, or $3.07 per share, resulting frompre-tax litigation settlement expenses of $190.6 million.
Excluding that item,adjusted income from continuing operations (non-GAAP measure) was $33.0 million.On an adjusted cash basis (non-GAAP measure), which excludes amortizationexpenses, income from continuing operations was $34.9 million, or $0.96 perdiluted share for the first quarter 2011 (please see attached supplement). Thisis compared to reported revenues of $291.9 million and adjusted cash basisincome from continuing operations of $26.3 million, or $0.75 per diluted sharefor the same period in 2010, which included several one-time items.
Firstquarter 2011 revenues and gross margin of $233 million and $109.7 million,respectively, increased from the $227.0 million in net sales and $95.3 millionin gross margin in the fourth quarter of fiscal 2010. The gross margin rate onthe company's consolidated product portfolio increased to 47.1 percent versus 42 percent inthe fourth quarter 2010.