Insight & Intelligence

More »

GEN News Highlights

More »
July 28, 2015

Hikma Buys Roxane for $2.65B, Expanding U.S. Generics Presence

  • Hikma Pharmaceuticals said today it agreed to acquire Roxane Laboratories and Boehringer Ingelheim Roxane from Boehringer Ingelheim for about $2.65 billion in cash and stock.

    Hikma said the deal vaults it into the sixth-largest drug company in the U.S. generics market by revenue, based on IMS Health data. Hikma’s generics business generated $216 million in revenue last year, accounting for approximately 15% of total revenue. The company says it has sought to grow its U.S. generics business by expanding its pipeline to include higher value, differentiated products in more niche segments.

    The deal, according to Hikma, will also expand its offerings by adding Roxane’s 88 marketed products, focused on specialized segments that include oncology, respiratory, extended release, and controlled substances—as well as Roxane’s 89 R&D projects.

    Roxane also has a pipeline of 89 projects in development stages—including 32 products currently filed with the FDA and 57 Paragraph IV products both filed and in development, of which 13 are first-to-file opportunities.

    “The addition of scale and product diversification to Hikma’s U.S. generics business will also position the company to better serve its customers in the US, who are themselves consolidating and increasingly preferring suppliers with scale and a broad product offering. In addition, the acquisition will enhance the overall diversification of the Hikma Group and create a more balanced business model, Hikma said in a statement.

    Longer-term, the company added, it aims to begin marketing its expanded pipeline in markets beyond the U.S., “particularly Roxane’s portfolio of oncology products into the MENA [Middle East and North Africa] region.”

    Hikma said it was also attracted to Roxane based in part on its R&D team and Columbus, OH, manufacturing facility with technologically complex formulation and alternative dosage form capabilities. Hikma said the plant can manufacture solids, liquids, nasal sprays, and dry powder inhalers—while also including a standalone high-containment facility, including product and analytical development areas; quality control laboratories; active pharmaceutical filling; manufacturing; packaging; and a finished goods warehouse.

    Roxane’s product offerings are concentrated within immediate-release solids as well as nasal spray, liquid and sub-lingual tablet products.

    “Roxane’s impressive portfolio, attractive pipeline and R&D expertise, focusing on higher value, niche and differentiated products, will create a platform for sustainable long-term growth,” Hikma CEO Said Darwazah stated. “The acquisition also significantly expands our manufacturing capacity and technological capabilities. Roxane has an excellent team of highly skilled employees and we are very excited about the value they will bring to Hikma.”

    Hikma agreed to pay $1.18 billion cash and issue 40 million new shares to Boehringer Ingelheim, representing about 16.71% of Hikma’s issued share capital. The companies agreed to an issue price of £23.50 ($36.66) per share, based on an exchange rate of $1.56 per U.K. pound.

    “Through this agreement, Boehringer Ingelheim will have a vested interest in Hikma and its significant potential, while focusing on growing our global core businesses as a research-driven pharmaceutical company,” added Professor Andreas Barner, chairman of the Board of Managing Directors of Boehringer Ingelheim. “Boehringer is confident that this transaction can better support the already successful Roxane business to realise its growth potential, domestically, and internationally.”

    The deal with Boehringer Ingelheim deepens Hikma’s relationship with the German pharma giant. Those ties were initiated last year when Hikma acquired Bedford Laboratories for up to $300 million from Boehringer’s Ben Venue Laboratories.

    In acquiring Roxane, Hikma also agreed to make contingent cash payments of up to $125 million, tied to achieving undisclosed performance milestones.

    Founded in 1885 as The Columbus Pharmaceutical Co., Roxane was renamed upon being acquired by Boehringer Ingelheim in 1978, and has grown since then to 1,360 employees.

    Hikma said the Roxane acquisition will immediate add to its “adjusted” earnings per share next year before amortization (exclusing software) and integration costs, and will be “very strongly accretive” to adjusted EPS thereafter.

Related content