To step up its role in the controlled release (CR) market, Actavis paid EUR85 million, or $110 million, for Abrika Pharmaceuticals. Abrika, a specialty generic pharmaceuticals company, is engaged in the formulation and commercialization of both controlled release (CR) and immediate release products.
"Our core objective for strategic acquisitions is to find opportunities that extend our product portfolio and pipeline as well as broaden our platform for growth in core markets,” remarks Robert Wessman, president and chief executive of Actavis. “Abrika entirely fits that rationale and therefore represents another significant step forward for Actavis in the U.S., a key market where we already generate a third of our total revenues. The addition of such an exciting, fast growing business to our group will allow us to grow our market share and take a leading position in the controlled release market."
Launching CR generics requires complex innovation and high manufacturing standards. Hence, competition is limited and there are higher and more durable margins than in other segments of the U.S. generics market, Actavis points out.
Following the transaction, Actavis will be one of the leading companies in the U.S. market in the development of CR products, the company states. The enlarged firm reports 13 pending ANDA's for CR products, 50 CR products in the pipeline, and plans to invest over EUR50 million in CR development in 2007.
"Abrika has rapidly reached a stage in its development where we felt we needed a strong strategic partner with a broad product portfolio and global presence that can foster the ability of our formulation team to create products for a global platform,” says Alan Cohen, chairman of Abrika. “Actavis has the expertise and infrastructure to accelerate our growth and take this business to the next level."
Abrika forecasts revenues of EUR20 million (US$26 million) for 2007 and EUR35 million (US$45 million) in 2008, with an EBITDA margin in both years of approximately 40%. In addition to the initial cash payment, Abrika could earn payments of up to EUR96 million (US$125 million) over the next three years subject to performance.