Sun buys contract drugmaker in US

Tags: News

Gets access to Pharmalucence’s specialised breast cancer drugs

The Dilip Shanghvi-led Sun Pharmaceutical Industries on Wednesday announced the acquisition of the US-based Pharmalucence through one of its overseas subsidiaries.

The buyout comes three months after the Mumbai-based firm acquired Ranbaxy in a $4.1 billion deal to create India’s largest and the world’s fifth largest drugmaker. It was the biggest pharma deal in the Asia-Pacific region in 2014.

Sun Pharma did not disclose the financial details of its latest acquisition. The Billerica, Massachusetts-based Pharmalucence specialises in contract manufacturing of high-end pharma products and is considered a specialist in sterile injectables and development of anti-breast cancer drugs.

The acquisition will give Sun Pharma a hold in the contract manufacturing space across the US and provide access to some specialised breast cancer products, considered a perfect fit for the Indian firm’s own significant portfolio of anti-cancer drugs.

Shares of Sun Pharma reacted sharply to the news and hit a 52-week high of Rs 753 apiece in Mumbai trading on Wednesday morning.

However, the stock lost ground as the session progressed and fell into the negative terrain briefly before ending the day at Rs 743.65, up 0.67 per cent.

The stock has gained 30.98 per cent this calendar compared with a 20.68 per cent rise in the equity benchmark, Sensex.

Nitin Khandkar, a Mumbai-based investment analyst, said “If the acquisition proves margin-accretive, it will help Sun Pharma, which has of late taken the inorganic route for growth. As long as there is no additional debt on the books, it will be a win-win situation for both.”

Dilip Shanghvi was not available for comment on his Pharmalucence acquisition. An email sent to John Felock, director for sales, marketing and customer services at Pharmalucence, seeking details of the transaction and future plans remained unanswered.

“Pharmalucence is into injectables and such dedicated facility will always prove useful. Sun Pharma already has an established base in the US. While they have not disclosed the financial details of the acquisition, I don’t think it would be heavy on the pocket to make any impact on its financials,” said Sarabjit Kaur Nangra, vice-president for pharma research at Angel Broking.

Over 50 per cent of Sun Pharma’s revenues comes from the US. For the year ending March 2014, the US market contributed $1.6 billion of Sun’s $2.7 billion total revenue. In India, the company has strong presence in niche therapy areas of psychiatry, neurology, cardiology, nephrology, gastroenterology, orthopedics and ophthalmology.

In March, drug regulator USFDA banned import drugs from Sun Pharma’s Karkhadi plant in Gujarat for violation of manufacturing norms.

Pharmalucence’s website says it has over 100 employees and it is into contract private label formulation development along with manufacturing services of non-cytotoxic human injectables in either liquid or lyophilised form.

Pharmalucence came into being in mid-2007 after it had bought out CIS-US. It set out to commercialise medical applications from isotopic technologies to become a contract manufacturer as well as a leading manufacturer of radiopharmaceuticals having applications in about a dozen areas.

In 2011 and 2012, Pharmalucence received FDA approvals for two new indications for its Sulfur Colloid product. Sulfur Colloid is indicated to assist localisation of lymph nodes draining a primary tumour in patients with breast cancer or malignant melanoma.

(With inputs from Amit Mudgill, New Delhi)

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