Corporate Banner
Satellite Banner
RNAi
Scientific Community
 
Become a Member | Sign in
Home>News>This Article
  News
Return

Pfizer Contemplates $2 Billion Acquisition of Strides’ Agila Unit

Published: Thursday, January 17, 2013
Last Updated: Thursday, January 17, 2013
Bookmark and Share
As drug makers continue to jostle for market share and deal with declining revenues from their off-patent blockbuster drugs, M&A activity is showing no indication of slowing down in 2013.

Pfizer, the world’s largest pharmaceutical company on revenues, is definitely not leaving any stone unturned as the company continues its aggressive inorganic growth. Less than two months after completing its acquisition of NextWave Pharmaceuticals, the multinational company is weighing up a $2 billion bid for Strides Arcolab’s Agila Specialties unit.

GlobalData (http://www.globaldata.com) believes the deal will potentially strengthen Pfizer’s injectables business, which generated only $54m – 0.4% of the company’s total revenue ($14 billion) – in Q3 2012.

According to Adefemi Adenuga, GlobalData's Analyst covering Healthcare Industry Dynamics:   “Agila’s focus on cancer treatments and antibiotics makes the company a strategic fit for Pfizer’s specialty care and oncology operating segment. Making a swoop for Agila could also be a ploy by Pfizer to ward off other multinationals, including Mylan and Novartis, that are currently interested in the Bangalore-based company. However, Strides may need to reposition itself if the deal goes through, as the Agila unit has so far been crucial to the generics manufacturer’s success.”

Plugging the Revenue Gap

The chasm in Pfizer’s revenues left by Lipitor’s (atorvastatin) loss of patent protection in November 2011 is a classic example of how large pharmaceutical companies, which have historically built their business operations on the blockbuster model, are reeling from patent expirations, says Adenuga. Pfizer’s Lipitor sales have declined by an average of 27.1% each quarter from Q4 2011, with GlobalData conservatively estimating that Pfizer’s annual report for 2012 will show that the drug, which achieved peak sales of $13.4 billion in 2006, generated only about $553m last quarter.

“This deal reaffirms Pfizer’s aim to bolster its bottom line through a series of strategic acquisitions,” explains Adenuga. “On November 28, 2012, Pfizer announced completion of its acquisition of NextWave Pharmaceuticals, a privately held, specialty pharmaceutical company focused on the development and commercialization of products for the treatment of Attention Deficit Hyperactivity Disorder (ADHD). Bolt-on acquisitions such as these are expected to provide a cushion for Pfizer’s short-term revenue gap while the company strategically positions itself to achieve sustainable growth in subsequent years.”

A Strategic Fit

Strides’ Agila unit has emerged as a suitable candidate based on the current business relationship between both companies. Since 2010, Strides has been involved in a collaboration agreement with Pfizer under which the former manufactures off-patent products, primarily injectable cancer therapeutics, which are then commercialized by Pfizer under the company’s established products unit – Pfizer’s name for its generics business.

Agila’s focus on cancer treatments and antibiotics makes it a strategic fit for Pfizer’s specialty care and oncology operating segment, which generated 30.8% ($3.7 billion) of the company’s product sales ($12.1 billion) and 26.6% of total revenue in Q3 2012. In 2010, the company declared its intention of being a major player in the injectables market, which it estimated to be about $10.9 billion, with a goal to be among the world's top five by 2015, and thereafter, leading the market.

Adenuga says: “Pfizer will be aiming to leverage Agila’s expertise in injectables to develop and commercialize products that will yield significant returns on investment. In addition, a successful integration of both companies will potentially result in cost savings for Pfizer.

“It will be interesting to see what path Strides follows if this deal goes through, because the company would have sold its most productive business unit.”

In Q3 2012, Agila accounted for 61.7% (about $68.1m) of Strides’ revenues ($110.3m). During the same period, the business unit generated 80.8% ($24.8m) of Strides’ $30.7m Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). Consequently, parting with Agila will have a significant impact on the company’s financial performance.

“Strides is no stranger to shedding business units,” says GlobalData’s industry expert Adenuga. “In January 2012, the company sold Ascent Pharmahealth, its Australian and South-East Asian unit, to Actavis (Watson Pharma at the time) for AUD375m ($396m) in cash. Successful completion of the Agila deal will give Strides substantial asset liquidity, which can be utilized in growing the company’s business, potentially through mergers and acquisitions.

“By Pfizer’s standards, this is not a large acquisition compared with prior mega-deals involving Warner-Lambert and Wyeth, for $90m and $68m respectively. Notwithstanding deal size, the company will be aiming to reap significant returns on its investment in Agila. There is a lot at stake in the current pharmaceutical landscape – no time to rue losses, just play to win.”


Further Information

Join For Free

Access to this exclusive content is for Technology Networks Premium members only.

Join Technology Networks Premium for free access to:

  • Exclusive articles
  • Presentations from international conferences
  • Over 2,900+ scientific posters on ePosters
  • More than 4,200+ scientific videos on LabTube
  • 35 community eNewsletters


Sign In



Forgotten your details? Click Here
If you are not a member you can join here

*Please note: By logging into TechnologyNetworks.com you agree to accept the use of cookies. To find out more about the cookies we use and how to delete them, see our privacy policy.

Related Content

Personalized Screening for Ovarian Cancer
With 60% of women diagnosed with ovarian cancer dying within five years of diagnosis there has been considerable efforts to try to detect the disease at an earlier stage.
Tuesday, June 30, 2015
T-DM1 Demonstrates Overall Survival Benefit in Metastatic Breast Cancer
Next target, FDA approval.
Thursday, August 30, 2012
Scientific News
Retractable Protein Nanoneedles
The ability to control the transfer of molecules through cellular membranes is an important function in synthetic biology; a new study from researchers at Harvard’s Wyss Institute for Biologically Inspired Engineering and Harvard Medical School (HMS) introduces a novel mechanical method for controlling release of molecules inside cells.
Advancing Synthetic Biology
Living systems rely on a dizzying variety of chemical reactions essential to development and survival. Most of these involve a specialized class of protein molecules — the enzymes.
NIH Researchers Identify Striking Genomic Signature for Cancer
Institute has identified striking signature shared by five types of cancer.
CRI Develops Innovative Approach for Identifying Lung Cancer
Institute has developed innovative approach for identifying processes that fuel tumor growth in lung cancer patients.
Counting Cancer-busting Oxygen Molecules
Researchers from the Centre for Nanoscale BioPhotonics (CNBP), an Australian Research Centre of Excellence, have shown that nanoparticles used in combination with X-rays, are a viable method for killing cancer cells deep within the living body.
Crowdfunding the Fight Against Cancer
From budding social causes to groundbreaking businesses to the next big band, crowdfunding has helped connect countless worthy projects with like-minded people willing to support their efforts, even in small ways. But could crowdfunding help fight cancer?
Cancer Cells Kill Off Healthy Neighbours
Cancer cells create space to grow by killing off surrounding healthy cells, according to UK researchers working with fruit flies.
Cancer Drug Target Visualized at Atomic Resolution
New study using cryo-electron microscopy shows how potential drugs could inhibit cancer.
Genetic Mechanism Behind Cancer-Causing Mutations
Researchers at Indiana University has identified a genetic mechanism that is likely to drive mutations that can lead to cancer.
Future of Medicine Could be Found in a Tiny Crystal Ball
A Drexel University materials scientist has discovered a way to grow a crystal ball in a lab. Not the kind that soothsayers use to predict the future, but a microscopic version that could be used to encapsulate medication in a way that would allow it to deliver its curative payload more effectively inside the body.
SELECTBIO

Skyscraper Banner
Go to LabTube
Go to eposters
 
Access to the latest scientific news
Exclusive articles
Upload and share your posters on ePosters
Latest presentations and webinars
View a library of 1,800+ scientific and medical posters
2,900+ scientific and medical posters
A library of 2,500+ scientific videos on LabTube
4,200+ scientific videos
Close
Premium CrownJOIN TECHNOLOGY NETWORKS PREMIUM FOR FREE!