Vivimed to acquire Actavis’ formulations manufacturing facility in Tamil Nadu for $20M

Hyderabad-based Vivimed Labs Ltd, which manufactures specialty chemicals and pharmaceuticals, has struck a deal to acquire the solid oral dosage (SOD) manufacturing facility owned by the US drug-maker Watson Pharmaceuticals Inc and located in Tamil Nadu, for Rs 122 crore ($20 million). The acquisition will be financed through internal accruals and debt.

The facility, owned by Actavis Pharma Manufacturing Pvt Ltd, is US FDA approved and was put up for sale by Watson after it acquired Actavis globally and decided to divest the latter’s SOD and active pharma ingredients (API) facilities as part of a consolidation exercise. The API facility of Actavis was divested in May 2013.

“This acquisition will provide us with a manufacturing platform for finished dosage formulations, along with a US FDA-approved facility and immediate access to the regulated markets. We have also acquired two commercially valuable and marketable abbreviated new drug applications (ANDAs), which we believe will allow us to generate additional revenues,” said Vivimed’s managing director and CEO, Santosh Varalwar.

Besides acquiring the facility, Vivimed is also entering into a contract manufacturing agreement with the Actavis Group for a defined period, which will be another revenue stream for Vivimed.

“The transaction has been structured attractively at a low net cash consideration for Vivimed,” added Varalwar.

Wadia-Ghandy was the legal advisor to Vivimed for the deal.

With this acquisition, Vivimed plans to target immediate finished dosage formulation (FDF) business in the US, according to the firm’s announcement to stock exchanges. At present, it caters to semi-regulated FDF markets.

The company’s stock rose 5 per cent to hit the upper circuit for the day at Rs 106.1 a share in early trading on the BSE in a strong Mumbai market on Thursday.

The facility, which is being acquired, has received the US FDA approvals in April 2007 and renewals in April 2009 and October 2011. Its current capacity is 1.2 billion SODs per annum. The unit is located on a 5-acre site of which three acres are not utilised now. Vivimed plans to expand the company’s manufacturing capacities over the medium term.

This is the company’s second acquisition this year. Earlier, Vivimed acquired Hyderabad-based Finoso Pharma for Rs 15 crore. Also in 2011, it made its single biggest acquisition overseas when it bought the API manufacturer Uquifa (it has intermediates and operations in Spain and Mexico) for Rs 286 crore. In the same year, Vivimed acquired Octtantis Nobel Labs and Klar Sehen Pvt Ltd.

The company, which has been on an aggressive expansion mode, is backed by Kitara Capital and Jacob Ballas.

(Edited by Sanghamitra Mandal)

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