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Acquisition is par for the course
WOODCLIFF LAKE, N.J.—Aimed at enhancing its R&D platform and significantly increasing its pipeline, Par Pharmaceuticals' agreement to purchase privately held specialty drugmaker and rival Anchen Pharmaceuticals is the "most significant acquisition in Par's history," declares Paul V. Campanelli, Par's executive vice president.
If approved, Par will pay the acquisition price of $410 million, and is expected to reap the rewards of the Irvine, Calif.-based company's extended release and niche generic products and other assets as early as year's end.
The transaction is expected to be immediately accretive to non-GAAP earnings in 2011, Par executives announced at a conference call held for investors and the media on Aug. 24.
With Anchen onboard, "our new portfolio is expected to generate significant and positive future cash flow, including more frequent product launches every year," Campanelli said in the call. "We look forward to Anchen launching from eight to 10 new products within the next two years which will contribute significantly to Par's revenues and gross product."
Par plans to finance the Anchen acquisition in part with a $350 million bank loan, to be repaid over five years with an adjustable rate that is expected to average around 5 percent, according to Michael A. Tropiano, Par's chief financial officer.
Anchen is described as a profitable, fully integrated pharmaceutical company with five commercialized products including generic forms of the well-known drugs Cipro, Wellbutrin and Ambien.
The California pharma has 27 abbreviated new drug approvals (ANDAs) on file with the U.S. Food and Drug Administration (FDA)—five of which are believed to be first-to-file —and approximately 26 additional products in development, according to Par.
Founded in 2002, Anchen has 218 employees and more than 72,000 square feet of expandable manufacturing and warehouse facilities, with state-of-the-art equipment.
J.B. Davis, senior vice president at Anchen, deferred all questions about the acquisition to Par.
Anchen has demonstrated sound management in all aspects of its operations, including its legal department, which has handled patent challenges, said Campanelli.
"Par has been evaluating Anchen for more than a year, and in that time, we have developed a very deep understanding of the organization, its assets and its culture," Campanelli said.
Campanelli stated during the conference call that it is too early to say whether all of Anchen's employees would be kept on.
After searching for the ideal acquisition for some time, Par believes it got it right.
"Anchen is the one we wanted and a terrific acquisition for Par Pharmaceuticals," Patrick G. LePore, chairman, CEO and president of Par, told investors. "I can 't wait to work with the people from California.
"This transaction accelerates the expansion of Par's research and development infrastructure and reinforces our strategy to provide long-term sustainable growth," LePore added. "Anchen has an excellent development track record and robust product pipeline, which, when combined with Par's existing capabilities and pipeline, more than doubles our product opportunities. Anchen also shares Par's highly entrepreneurial culture and cost-efficient approach to product development, which should allow for a seamless integration."
Par made a deal for another small generics company in May, agreeing to acquire India-based Edict Pharmaceuticals for up to $37.6 million. The company expects the deal to close by the end of the year and add to earnings in 2013.
Par has also been moving into the branded pharmaceutical market by developing updated versions of off-patent drugs.
Par has two operating divisions, Par Pharmaceutical and Strativa Pharmaceuticals, which develop, manufacture and market generic drugs and proprietary pharmaceuticals.
Par announced earlier this summer that it plans to cut 100 jobs—about 15 percent of its workforce of 600—in the Strativa division.
At that time, LePore said the company planned to focus on two Strativa products: Megace, which treats appetite loss and weight loss, especially in AIDS patients; and Nascobal, a vitamin B-12 nasal spray. Strativa also makes Zuplenz, an anti-nausea drug aimed at cancer patients undergoing chemotherapy or radiation, and Oravig, an anti-fungal medicine. Besides its headquarters in Woodcliff Lake, the company has locations in Suffern, Spring Valley and Hauppauge, N.Y.
Par Pharmaceuticals conducts manufacturing in the United States and markets and/or licenses more than 85 prescription drug product. Par also has more than 50 currently marketed products, more than 30 products in active development and manufacturing plant capability of more than 2 billion tablets per year.