İsviçre Basel'deki Novartis binası (Photo credit: Wikipedia)
The pharmaceutical business is a busy place these days, with industry giants like Pfizer divesting assets to help offset the loss of patent protection on key drugs and plenty of major drugmakers trying to help fill out their business with acquisitions. Novartis is among those in the latter camp, and made a deal Wednesday that makes it the top generic dermatology company in the world.
Novartis said its generics division Sandoz will become the global leader in generic dermatology medicines thanks to the $1.5 billion acquisition of New York-based Fougera Pharmaceuticals.
The target, previously owned by a private equity consortium led by Nordic Capital, Credit Suisse's DLJ Merchant Banking and Avista Capital Partners, had 2011 net sales of $429 million. Together with Sandoz it is expected to deliver estimated annual sales of $620 million, primarily in the U.S.
Fougera has more than 45 products in the dermatology generics sector. Its branded business PharmaDerm has another 17 products. Executives at Novartis' Sandoz division cited the combinations stronger portfolio and the significant sales and cost synergies given that both serve many of the same customers.
Novartis expects to complete the all-cash deal in the second half of 2012, and said it is paying a multiple of 8.8 times 2011 earnings before interest, taxes, depreciation and amortization of $173 million. The Swiss pharmaceutical company said the deal should be accretive to earnings from the start and will be financed with existing resources and cash flow.