NASDAQ-listed pharmaceutical company Akorn, Inc. has struck a deal to acquire certain assets of Kilitch Drugs (India) Ltd, a contract manufacturer of sterile injectables, for Rs 200 crore.
Kilitch is a listed pharma company that manufactures and markets generic pharmaceutical formulations including injectables (liquid and dry). The company has two manufacturing facilities located in Navi Mumbai and Paonta Sahib (Himachal Pradesh), and it has forayed into marketing and distribution of ophthalmology products in India and certain overseas markets.
The deal involves purchase of the pharmaceutical formulation unit at Paonta Sahib on a slump sale basis for a cash consideration of Rs 188 crore. Kilitch will also transfer certain additional products to Akorn which are currently being manufactured at its Mumbai plant, for an additional cash consideration of Rs 11.75 crore.
Akorn has also struck another deal with NBZ Pharma, one of the promoters of Kilitch, to acquire certain other assets for Rs 34.46 crore. Moreover, Kilitch promoters will get a non-compete fee of Rs 20 crore for not getting into a competing business for another four years. The US firm has also entered into an agreement with the promoters of Kilitch for certain other services such as including managing the business for one year, for an additional consideration of Rs 30 crore.
Kilitch Drugs scrip hit the 5 per cent upper circuit at Rs 84 a share on Friday in a strong Mumbai market. At this price, the company has a market cap of Rs 111 crore or almost half of the price it would get for selling bulk of its existing business.
After the asset sale, Kilitch will continue to be in the business of eye care products and will also export generic products to certain overseas markets.
Akorn is a niche pharmaceutical company engaged in the development, manufacturing and marketing of multisource and branded pharmaceuticals. It has manufacturing units at Decatur (Illinois) and Somerset (New Jersey) where the company manufactures ophthalmic and injectable pharmaceuticals.
According to Raj Rai, chief executive officer of Akorn, the deal expands both its capacities and capabilities for sterile injectables. “With this platform, we plan to offer speed to market, high quality, comprehensive and cost-effective solutions to our domestic customers, specifically for critical care products in categories such as anti-infectives and cancer which are consistently in short supply.
Strategically, we will also establish a global footprint, getting access to the fast-growing emerging markets. Finally, this acquisition provides us with a road map to become a leader in the generic injectable market,” he added.
This acquisition will give Akorn five cGMP manufacturing sites designed for regulated markets, with approximately 230,000 sq. ft. of manufacturing space sprawled over 14 acres of land, two completed and operational plants and three under construction, diversified sterile injectable packaging configurations and access to the fast-growing Indian market through contract customers. The deal will also enable Akorn to fast-forward pending product registrations in more than 25 countries in Latin America, Asia, the Middle East, Europe and Africa. Its current portfolios consist of 300 formulations.
KPMG Corporate Finance acted as the exclusive financial advisor to Kilitch for the transaction. PricewaterhouseCoopers Pvt Ltd (India) provided financial due diligence services and Khaitan & Co. provided legal advisory services to Akorn.