Lupin buys US generics drug maker Gavis for $880 mn

Lupin Ltd, India's fourth-largest drug maker by sales, has agreed to buy US generic drugs manufacturer Gavis Pharmaceuticals LLC and Novel Laboratories Inc for $880 million.

The cash-free and debt-free deal, widens the company's pipeline in dermatology, controlled substance products and other high-value and niche generic products while strengthening its presence in the US, the world's largest market for pharma products, Lupin said in a statement.

The boards of directors of Lupin and Gavis have unanimously approved the transaction.

''Gavis brings to Lupin a highly skilled US-based R & D organisation, which would complement Lupin's Coral Springs, Florida, inhalation R&D center. Gavis's New Jersey-based manufacturing facility will become Lupin's first manufacturing site in the US,'' Lupin said in a release.

New Jersey based Gavis is a privately-held company specialising in formulation development, manufacturing, packaging, sales, marketing, and distribution of pharmaceuticals products.

The company recorded sales of $96 million in FY 2014 and has over 250 New Jersey-based employees. It currently has 66 ANDA filings pending approval with the US FDA and a pipeline of over 65 niche dosage forms. To date, Gavis has filed 25 Para IVs and 8 FTFs products. Gavis's pending filings address a market value of about $9 billion.

The combined company will have a portfolio of 101 products in the market, 164 cumulative filings pending approval and a deep pipeline of products under development for the US. The acquisition creates the fifth-largest portfolio of ANDA filings with the US FDA, addressing a $63.8-billion market.

"Gavis has a strong track record of delivering highly differentiated products in a short time and is poised for continued strong growth as it delivers on its existing pipeline. Gavis's capabilities and pipeline are an excellent complement to Lupin. The acquisition accelerates Lupin's entry into niche areas like controlled substances and dermatology. We are confident that Lupin's proven commercialisation capabilities, vertically integrated manufacturing operations and supply chain strengths will accelerate Gavis's growth,'' Vinita Gupta, chief executive officer of Lupin Limited, said.

Lupin expects the acquisition to be accretive to the earnings from the first full year of operations. ''In addition to the compelling strategic fit, there is a strong cultural fit between Gavis and Lupin's entrepreneurial spirit and values,'' she added.

''This is a time of globalisation for the specialty pharmaceutical industry and Gavis is well positioned to capitalise on this exciting opportunity. Joining forces with Lupin, a truly global player, will help realise our vision of building a broader, research-based high value, specialty business through organic growth. I am confident that the combined entity will be a powerhouse in the US specialty space and will significantly enhance Lupin's US platform,'' said Dr Veerappan Subramanian, founder and CEO of Gavis.

Lupin is the fifth-largest and fastest-growing top 5 generics player in the US, with a market share of 5.3 per cent in prescriptions and the third-largest Indian pharmaceutical company by sales. The company is also amongst the top 10 generic pharmaceutical players in Japan and South Africa.

For the financial year ended 31 March 2015, Lupin's consolidated turnover and after-tax profit stood at Rs12599.7 crore ($2.06 billion) and Rs2403.2 crore ($393 million) respectively.