Mumbai: Novartis will sell the dermatology and generic oral solids portfolios of Sandoz US to Aurobindo Pharma for $900 million, as the Swiss drug maker looks to focus on higher growth areas.

The deal also includes about 300 products and additional development projects of Sandoz and an additional $100 million in performance-based payments, Novartis said.

"As part of the transaction, Aurobindo will acquire the manufacturing facilities in Wilson, North Carolina, as well as Hicksville and Melville, New York. The business had net sales of $0.6 billion in the first half of 2018," it said.

As part of the agreement, approximately 750 employees in Hicksville, Melville, Wilson and Princeton, New Jersey, as well as the field representatives for the PharmaDerm branded dermatology business, are expected to be transferred to Aurobindo upon the closure of the deal.

Aurobindo Pharma managing director N. Govindarajan said the acquisition is in line with the company's strategy to grow and diversify business in the US.

"Acquiring these businesses from Sandoz will allow us to further expand our product offering and to become a leading player in the generic dermatology market," he added.

Overall the transaction will position Aurobindo as the second largest dermatology player and the second largest generics company in the US by prescriptions, he said.

"We expect a seamless integration of the acquired businesses with the rest of the Aurobindo group given the success we have achieved in our acquisitions to date."

"As we have done in some of our previous acquisitions, we will be focused on leveraging our group's market leading vertically integrated and highly efficient manufacturing base to enhance the market position and medium-term profitability of the businesses we are acquiring," Govindarajan said.

The transaction is expected to close by 2019, following the completion of customary closing conditions, including US Federal Trade Commission clearance, Aurobindo said.

The transaction will also bring in specialized manufacturing capabilities in creams, ointments, and other topical dosage forms.

While the acquisition will come with specialized capabilities in creams, ointments, lotions, topical solutions and topical suspensions, they will be complementary to its current manufacturing footprint.

Stock markets reacted positively to the acquisition on Thursday with the Aurobindo stock zooming over 9 per cent to settle at Rs 759.55 as investors felt that the consideration was not expensive.

The 131-year-old Sandoz unit was hurt by price pressure in the United States, prompting Novartis chief executive officer Vas Narasimhan to sell parts of the Sandoz unit.

He has so far said Sandoz businesses elsewhere remain core parts of Novartis.

Narasimhan is also keeping Sandoz biosimilars business - less-expensive near copies of complex biological medicines whose patents have expired - on hopes that rising demand from cash-strapped governments and insurers seeking to contain costs will help Sandoz boost its margins.

Novartis had earlier this year expressed its intention to sell the Sandoz unit after reporting disappointing sales from the unit.

"Sharpening our portfolio focus in the US allows us to devote more time and resources toward our strategy of bringing complex generics, value-added medicines and biosimilars to patients in the US, creating higher value and opening up access to important medicines where alternatives are truly needed," Richard Francis, Sandoz CEO and member of the Novartis Executive Committee, said.