Hikma Pharmaceuticals said today it is acquiring assets of generic injectable drug maker Bedford Laboratories for up to $300 million from Boehringer Ingelheim (BI)’s Ben Venue Laboratories—which has separately begun exclusive talks to sell its Bedford, OH, manufacturing facility to the U.K-based pharma.

Hikma said its global injectable drugs business would be strengthened through the Bedford Labs deal—as well as the possible acquisition of the Bedford, OH, site, since it is one of the world’s largest sterile injectable manufacturing facilities.

In buying Bedford Labs, Hikma would create the largest portfolio of generic injectable products in the U.S., by combining the nation’s third-largest portfolio of its 63 existing marketed products with Bedford’s 84 products. The Bedford portfolio covers several therapeutic categories, from a large number of oncology products to a number of niche, differentiated products.

Hikma agreed to pay Ben Venue $225 million upfront, plus $75 million in payments tied to achieving performance-related milestones over five years. The company said it expects to complete the transaction in the second half of this year, subject to customary regulatory approvals, after paying for the acquisition through new debt.

The deal further builds an injectables business that Hikma has been growing since 2011, when it acquired Baxter International’s Multi-Source Injectables business, a deal that established Hikma as the third largest supplier by volume in the U.S. generic injectables market.

Last year Hikma’s global injectables business generated $536 million in revenue. That accounted for 39% of total revenue for Hikma, which also runs branded and generics businesses, based principally in the Middle East and North Africa.

However, the generic injectable products covered by the Bedford deal racked up just $19 million in revenue—and a loss of $22 million in earnings before interest, taxes, depreciation, and amortization (EBITDA)—reflecting limited sales following manufacturing issues that prompted BI to shut down the Bedford, OH, site last year, idling all 1,100 workers. Hikma projects revenues for the Bedford products will zoom to $150 million by 2017, following the expected relaunch of all Bedford products.

Hikma also disclosed it had begun exclusive talks with BI to acquire the Bedford plant, whose capabilities include one of the largest lyophilization plants in the world and dedicated cytotoxic facilities.

BI began shutting down the plant after projecting it would lose $700 million over five years, on top of $350 million already spent correcting manufacturing problems like those that led to a 2011 shutdown—and infamously included a 10-gallon can with urine in a storage area.

“The effort, magnitude of investment, and additional years required to remediate the facility before Ben Venue can return to sustainable production is not feasible,” BI stated at the time.

Another reason Hikma cited for its attraction to Bedford was its R&D pipeline of 27 products, of which 16 are filed and pending approval from the FDA. The pipeline products include higher-value, medically necessary and acute care products—as well as numerous business development projects, including licensing and co-development partnerships. 

“The large number of high value, niche and differentiated products we are acquiring will strengthen our market position in the U.S. and will benefit patients by bringing back products to the market that are currently in short supply,” Hikma CEO Said Darwazah said in a statement. “We remain committed to investing in the long term growth of our Injectables business and we believe that this transaction will deliver significant future value.”

Hikma said the pipeline also includes numerous “Paragraph IV” generic-drug opportunities, in which generic drugmakers certify that their product either does not infringe on listed patents or that the patents are unenforceable. But if branded companies should file a patent-infringement action against Hikma, the company would have to win the court case or wait 30 months before FDA would be able to approve a generic application, slowing down the generic products’ entry to market.

In addition to the portfolio, Hikma is buying Bedford assets that include IP rights, contracts for products marketed under license, raw material inventories, and a number of employees across key business functions. 

Hikma said it planned to manufacture the products it is acquiring from Bedford at FDA-approved facilities in the US, Portugal and Germany as soon as the deal closes.

“We are targeting to transfer an initial tranche of around 20 products, which we expect to be able re-launch to the market between 2015 and 2017, with the potential to transfer further products thereafter,” Hikma stated. “The products will be prioritized based on the strength of the market need, the ease of transfer and the expected gross margin contribution.”

The Bedford deal will slightly lower Hikma’s earnings per share this year and next, but will be “strongly accretive” to EPS from 2016 onward, Hikma said.

Hikma returned $212 million in profit to shareholders during 2013, on $1.365 billion in total revenue.

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