Drug firm Strides Arcolab Ltd has completed sale of its specialties division Agila Specialties Pvt Ltd to the US-based generic drug major Mylan Inc for up to $1.75 billion, a company statement said on Thursday.
However, the company has agreed to Mylan holding back $250 million following a warning letter it received from the drug regulator US Food and Drug Administration (USFDA) for one of its injectable facilities in Bangalore.
Strides said in the statement that since the initial announcement of the transaction, the board of directors has given nod to final transaction terms to include "a hold back of $250 million contingent upon satisfaction of certain regulatory conditions.”
The Indian firm expects those contingent conditions to be satisfied sometime in 2014.
Also, Strides said that it now expects an additional expenditure of $150 million for buying more assets from its erstwhile partners and in remediation costs related to its regulatory commitments after the USFDA letter.
Following an inspection in June, USFDA had issued a warning letter in September to Agila Specialties for flouting manufacturing norms in one of its units in Bangalore.
On the completion of the transaction, Strides founder and group CEO Arun Kumar, said, “We are delighted with the conclusion of this transaction and are confident that Agila will play a significant role in Mylan's growth strategy to become a global injectable leader.”
Mylan, in February this year, had agreed to acquire Agila Specialties, to strengthen its presence in the fast-growing injectable medicine market.
The Bangalore-based specialties division of Strides will bring Mylan a broad product portfolio of over 300 filings approved globally and marketed via a network spanning 70 countries. These include 61 abbreviated new drug applications (ANDAs) approved by the US drug regulator.
Presently, Agila produces drugs across nine manufacturing facilities in India, Brazil and Poland, eight of which have been approved by the USFDA.
Moelis & Company acted as independent financial advisor to Strides on the sale, while Jefferies International acted as the exclusive advisor.
(Edited by Joby Puthuparampil Johnson)