Generics producer Par Pharmaceuticals (NYSE: PRX) has been snapped up by a global private equity firm TPG in a deal that values the company at $1.9 billion, the tenth largest deal for the year to date, according to data from Dealogic. Par may well try to get a better deal since it’s got until August 24 to do just that. But it’s another positive indicator on the resurgence of deals in the biotechnology and pharmaceutical space.
The acquisition offer by TPG surprised ThinkEquity Senior Analyst James Malloy who thought a more predictable owner would be Endo Health Solutions, since they have made a number of acquisitions in recent years, including generics producer Qualitest in November 2010. The deal provided Endo with 50 abbreviated new drug applications under review by the U.S. Food and Drug Administration in therapeutic areas across pain management, urology, central nervous system disorders, oncology, women’s health and hypertension, among others. But as TPG Partner Todd B. Sisitsky said in a company statement, “The company is positioned to benefit from the strong macro trends of a greater focus on cost effective healthcare solutions and the increasing demands from an aging population.”
One advantage of a private equity buyer is the leadership is more likely to stay in tact. That might be more of a risk factor were it to be acquired by a competitor or a branded company looking for an acquisition to throw its hat into the generic market.
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There has been quite a bit of crossover between generic and branded pharmaceutical companies with the likes of Watson and Teva keen to have the profitability that accompanies a successful branded drug with patent exclusivity lasting years instead of months. And yet branded drug companies yearn for the lower costs and dependability that a generic drug can offer. After all, the generics space is where everything ultimately gets to, once the patents are expired and the legal battles are lost or won. Par’s branded strategy has been retooled, but as Malloy put it, “You’re allowed to be wrong, you’re just not allowed to stay wrong.”
How old is it? It was started in 1978 (34).
Where is its headquarters? Woodcliff Lake, New Jersey.
How many generic drugs has it submitted for approval lately? Last year, it had 72 Abbreviated New Drug Applications filed with the U.S. Food and Drug administration with 19 confirmed first-to-file and four potential first-to-market product opportunities. If a generics company is recognized as the first-to-file for a generic version of a branded drug, it gets six months’ exclusivity ahead of other generic versions of the drug.
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What are its best sellers? Twelve drugs accounted for 72 percent of its net revenues last year, according to its annual report: Metoprolol succinate ER: a beta blocker used to treat hypertension, angina and prevent heart attacks; budesonide: glucocorticoid steroid used to treat asthma, allergies; propafenone: used to treat irregular heartbeat; sumatriptan succinate injection: used to treat migraines and cluster headaches; chlorpheniramine/hydrocodone: used to treat colds/flu; amlodipine and benazepril HCl: used to treat high blood pressure; dronabinol: used to treat nausea and vomiting associated with chemotherapy; tramadol ER: used to treat moderate to severe pain; and branded drugs Nascobal: used to prevent the loss of vitamin B12 that can result in anemia; and Megace ES: used to relieve the symptoms and reduce the suffering caused by advanced breast cancer and advanced endometrial cancer.
Who are its biggest customers?Its three largest customers accounted for more than 50 percent of the company’s total revenues in 2011, according to its annual report. They were: McKesson Drug Co. (21 percent), Cardinal Health Inc. (20 percent), and AmerisourceBergen Corporation (12 percent).
