Covid-19 blow to Aurobindo Pharma
Deal cancellation leaves hydroxychloroquine, an older malaria drug, in Sandoz generic unit’s portfolio; it is a possible drug to fight Covid-19
- Published 3.04.20, 2:19 AM
- Updated 3.04.20, 2:19 AM
- a min read
Hyderabad-based Aurobindo Pharma on Thursday said its $900 million deal to acquire Sandoz Inc’s generic oral solids and dermatology businesses in the US has been mutually called off in the absence of regulatory permission. The cancellation leaves hydroxychloroquine, an older malaria drug, in Sandoz’s portfolio.
Sandoz parent Novartis’s chief executive Vas Narasimhan is touting the drug as a potential coronavirus treatment. Novartis is donating 130 million hydroxychloroquine doses to support efforts against the epidemic, though the European Union has so far said there is no proof it works.
“The decision was taken as approval from the US Federal Trade Commission (FTC) for the transaction was not obtained within anticipated timelines,” Aurobindo Pharma said in a filing to the stock exchanges.
The US subsidiary of Aurobindo Pharma had entered into a pact in September 2018 to acquire the commercial operations and three manufacturing facilities in the US from Sandoz Inc, US. The deal also included about 300 products and additional development projects of Sandoz plus $100 million in performance-based payments.
Aurobindo would have also acquired the manufacturing facilities at Wilson, North Carolina, as well as at Hicksville and Melville, New York.
The acquisition was to be made through its wholly-owned subsidiary, Aurobindo Pharma USA Inc, and it was in line with the company’s strategy to grow and diversify the business in the US. The transaction would have positioned Aurobindo as the second largest dermatology player and the second largest generics company in the US by prescriptions.
Initially, the deal was expected to close by 2019, following the completion of customary closing conditions, including the US FTC.
In a conference call with analysts post its third quarter results, the management of Aurobindo Pharma had admitted the transaction had not met the set timeline even as they expressed optimism the deal could be consummated in the January-March quarter.
On Wednesday, the Aurobindo Pharma stock has ended more than five per cent, or Rs 20.90, lower at Rs 392.15.