Piramal acquires Mallinckrodt’s pain management drug portfolio for $203 million

Piramal Enterprises Limited today announced the acquisition of a portfolio of drugs for spasticity and pain management from Mallinckrodt LLC in an all-cash deal worth $171 million and up to $32 million in additional payment depending on financial performance of the acquired assets over the next 3 years.

Piramal Enterprises made the acquisition through its wholly owned Critical Care subsidiary in the UK, which has entered into an agreement to acquire the portfolio of intrathecal spasticity and pain management drugs from Mallinckrodt LLC.

The portfolio of acquired drugs includes Gablofen (baclofen), a severe spasticity management product, which is currently marketed in the United States, and two pain management products, which are currently under development.

Gablofen has also been approved for launch in eight European markets. It is the only intrathecal baclofen drug available in vials and pre-filled syringes, which are preferred by users over the competing products available in ampoules.

The pain management drugs under development are also for intrathecal administration. In the twelve months ended 30 September 2016, the acquired portfolio generated revenues of $44.6 million.

''We continue to invest in the growth of our pharmaceutical businesses. This would be our seventh pharma acquisition in the last two years, taking our investment for inorganic growth to Rs3,000 crore across our pharmaceutical businesses. All these acquisitions are expected to be value accretive and will improve our pharmaceutical segment's growth and EBITDA in percentage and in absolute terms,'' Ajay Piramal, chairman, Piramal Enterprises Limited, commented on the acquisition.

''This transaction is a step further in our strategy to make investments, in both internal developments and acquisitions, to expand our presence in the global generic hospital drug market, which is greater than $20 billion in size. Through this strategy, our focus continues to be the creation of long term value for shareholders,'' he added.

''This is Critical Care's second acquisition in the last four months, following our acquisition of a portfolio of anesthesia and pain management injectable drugs from Janssen Pharmaceutica NV. This acquisition provides Piramal a leadership position within the intrathecal spasticity segment and the opportunity to access the intrathecal pain management market, which is complementary to our critical care focus, and leverage our current operations and capabilities, especially in the US, added Peter DeYoung, CEO, Piramal Critical Care.

''These acquisitions add branded products that are in attractive niches with barriers to entry and limited competition. Along with our Inhalation Anesthesia products, we are building an exciting portfolio to offer our customers and a substantially more diversified revenue base,'' he added.

Completion of the transaction is subject to HSR review in the US and certain other conditions. No related party of PEL has any interest in Mallinckrodt, Piramal Enterprises added.

"Mallinckrodt is transforming its portfolio to become a top-performing specialty pharmaceutical company, systematically divesting non-core businesses to build upon our growth platforms in autoimmune and rare diseases and hospital therapies," said Mark Trudeau, president and chief executive officer of Mallinckrodt. "While net sales for our Intrathecal Therapy business have increased approximately 50 per cent since 2012 and it has become significantly more profitable, the products have limited commercial synergy with other parts of our growing specialty brands segment. The sale of this business to Piramal is the best solution to meet patient needs and will free resources for us to invest in additional growth."
 
"This divesture is in line with our ongoing focus on driving return on invested capital decisions we make on behalf of shareholders," said Matt Harbaugh, executive vice president and chief financial officer of Mallinckrodt. "The transaction is a perfect example of how we pursue activities that have positive economic outcomes."