Aurobindo Pharma’s $1-bn deal with Novartis unit Sandoz collapses

By Joseph Rai

  • 02 Apr 2020
Credit: Thinkstock

Aurobindo Pharma Ltd’s planned acquisition of the US generic oral solids and dermatology businesses of Sandoz Inc., a unit of Novartis AG, has fallen apart.

The Indian drugmaker said in a stock-exchange filing that the agreement was mutually terminated as approval from the US Federal Trade Commission for the transaction was not obtained within anticipated timelines.

Shares of Aurobindo Pharma on Wednesday closed at Rs 392.15, down 5.06% on the BSE in a weak Mumbai market amid coronavirus pandemic. Indian markets are closed today.

Aurobindo Pharma had, in September 2018, agreed to purchase Sandoz’s US dermatology and generic pills business for as much as $1 billion in the biggest overseas acquisition by an Indian drugmaker.

The transaction involved a payment of $900 million (about Rs 6,470 crore) in cash for the acquisition of about 300 products, three manufacturing facilities in the US and Eon Labs Inc., a wholly-owned unit of Sandoz. The deal also entailed potential earn-out payments of $100 million on products in the pipeline.

The consummation of the deal would have trumped two other deals by Indian pharmaceuticals companies made in the past years: Lupin Ltd’s 2015 acquisition of US-based Gavis Pharmaceuticals and Novel Laboratories Inc. for $880 million (Rs 5,610 crore) and Intas Pharmaceuticals’ 2016 purchase of the assets and operations of Actavis Generics in the UK and Ireland from Teva Pharmaceutical Industries for $769 million.

The completion of the deal would have made Aurobindo the second largest generic player in the dermatology segment in the US and further strengthen its oral solids product basket, N. Govindarajan, MD at Aurobindo Pharma, said in its latest annual report.

Aurobindo’s US business clocked a 21% growth to Rs 9,030.7 crore in 2018-19 on the strong performance of its key business segments, including orals, injectables, over the counter (OTC) drugs and dietary supplements, it said. The US business accounted for 46% of the company’s revenue during the period. In the last fiscal, the company also launched 50 new products, including 12 injectables in the US market.

The Indian pharma company made some significant bets in the past years.

In January last year, Aurobindo had agreed to buy seven branded oncology injectables from US-based Spectrum Pharmaceuticals Inc. for up to $300 million. 

In 2018, Aurobindo signed a pact to acquire the commercial operations and certain supporting infrastructure assets of Canadian pharmaceutical firm Apotex International Inc. in five European countries for 74 million euros ($86.5 million).  

Aurobindo’s product portfolio is spread across seven major therapeutic areas including antibiotics, antiretrovirals gastroenterological, anti-allergies and antidiabetics. The company is marketing these products in over 150 countries.