- Consolidation within the generics sector continued with the proposed acquisition of Akorn by Fresenius Kabi, announced Monday evening. The German company's U.S. subsidiary will pick up Akorn for $34 per share plus $450 million in debt in a deal that's worth $4.3 billion.
- The transaction is expected to close by early 2018 and has already been approved by the boards of both companies. The deal will be accretive to Fresenius Group earnings in 2018.
- Fresenius Kabi also announced that it will acquire Merck KGaA's biosimilars business, including 70 employees at two sites in Switzerland. The biosimilars pipeline focuses on oncology and autoimmune products with current branded sales of about $30 billion. Fresenius is paying Merck €170 million ($185 million) upfront in cash and €500 million ($544 million) in milestones, plus royalties on any products that reach the market.
Rumor of the Akorn take out by Fresenius Kabi began in early April and was finalized on April 24. Akorn stands as a logical acquisition target, analysts say, because of its broad portfolio of specialty and hard-to-manufacture generic products, including sterile and non-sterile drugs, injectables, and ophthalmic and dermatologic products.
Akorn's portfolio includes more than 180 marketed products, as well as 85 abbreviated new drug applications (ANDAs). The company has five manufacturing sites in the U.S., Switzerland and India, and had revenues of $1.1 billion in 2016. The company's deep portfolio of ANDAs has a potential value of nearly $9 billion, estimates Jefferies analyst David Steinberg.
Fresenius Kabi, for its part, has been on a takeover tare since new CEO Stephan Sturm took the helm last summer. The company is working to bolster its presence as a global player, acquiring Spanish hospital group IDC Salud for $6.1 billion last September and announcing after markets closed yesterday that it would pick up Merck KGaA's biosimilars portfolio for €670 million.
The two deals add a wide variety of products to Fresenius Kabi and complement its sterile injectables business, which makes up nearly 20% of its $30 billion in revenues.
Generic drugmakers have been consolidating over the last couple of years, led by the $40 billion acquisition of Actavis by Teva Pharmaceuticals. The mass consolidation of the space has led to higher generic prices, even as pricing backlash continues. Investigations into pricing collusion amongst generic companies are ongoing.