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Novartis’s generic drugs division Sandoz has agreed to buy Fougera Pharmaceuticals for $1.53bn in cash in a deal that creates the world’s biggest generics company focused on dermatology medicines.
Net sales at Sandoz last year were $9.47bn and the addition of Fougera will lift its annual dermatology sales to $620m.
New York-based Fougera is owed by a consortium of private equity firms led by Nordic Capital, Credit Suisse’s DLJ Merchant Banking and Avista Capital Partners. Those firms had previously owned Nycomed, the Swiss drug company. But when the firms sold Nycomed to Takeda Pharmaceutical for $13.7bn last year, they kept Fougera.
Jeff George, global head of Sandoz, said the acquisition makes Novartis the leading company for dermatology generics. “We see great potential to take a business that’s a US business and take it globally,” he told the Financial Times.
Sandoz, which is based in Switzerland, operates in 130 countries around the world.
Novartis has been building its generics business to help cope with the loss of its own drugs that are going off-patent. Meanwhile, a growing number of dermatology creams and ointments are losing patent protection, making companies such as Fougera a source of growth.
Healthcare was the busiest sector by deal value for global M&A in April, with 202 deals worth more than $33bn, according to Dealogic. That did not include Pfizer’s $11.8bn sale of its infant nutrition business to Nestlé.
Executives at generics companies are pursuing consolidation in a bid to expand their reach and diversify their offerings.
Last week Watson Pharmaceuticals
acquired Actavis in a $5.6bn deal, positioning the combined company as the third largest generics maker by sales. Teva is the largest generics producer, with about $13bn in revenues last year.
Meanwhile, AstraZeneca acquired US biotechnology company Ardea Biosciences in a $1.3bn deal last week and Amgen, the US biotechnology group, paid $700m for control of Mustafa Nevzat Pharmaceuticals, a Turkish generic drugs company. That deal was intended to hasten its shift into off-patent medicines and emerging markets.
The US generic dermatology market had about $2.1bn in sales last year and has been growing at double-digit rates in recent years. Fougera has 45 products and it operates PharmaDerm, a speciality drug company with 17 brands.
Novartis was advised by Jefferies and Fougera was advised by Credit Suisse and Rothschild.
The deal is expected to close in the second half of 2012.