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

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 ( 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
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 2,800+ scientific posters on ePosters
  • More than 4,000+ 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 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
New Class of RNA Tumor Suppressors Identified
Two short, “housekeeping” RNA molecules block cancer growth by binding to an important cancer-associated protein called KRAS. More than a quarter of all human cancers are missing these RNAs.
Mathematical Model Forecasts the Path of Breast Cancer
Chances of survival depend on which organs breast cancer tumors colonize first.
Exploring the Causes of Cancer
Queen's research to understand the regulation of a cell surface protein involved in cancer.
Nanocarriers May Carry New Hope for Brain Cancer Therapy
Berkeley lab researchers develop nanoparticles that can carry therapeutics across the brain blood barrier.
RNA-Based Drugs Give More Control Over Gene Editing
CRISPR/Cas9 gene editing technique can be transiently activated and inactivated using RNA-based drugs, giving researchers more precise control in correcting and inactivating genes.
University of Glasgow Researchers Make An Impact in 60 Seconds
Early-career researchers were invited to submit an engaging, dynamic and compelling 60 second video illuminating an aspect of their research.
Metabolic Profiles Distinguish Early Stage Ovarian Cancer with Unprecedented Accuracy
Studying blood serum compounds of different molecular weights has led scientists to a set of biomarkers that may enable development of a highly accurate screening test for early-stage ovarian cancer.
Dead Bacteria to Kill Colorectal Cancer
Scientists from Nanyang Technological University (NTU Singapore) have successfully used dead bacteria to kill colorectal cancer cells.
CRISPR-Cas9 Gene Editing: Check Three Times, Cut Once
Two new studies from UC Berkeley should give scientists who use CRISPR-Cas9 for genome engineering greater confidence that they won’t inadvertently edit the wrong DNA.
Genetically Engineering Algae to Kill Cancer Cells
New interdisciplinary research has revealed the frontline role tiny algae could play in the battle against cancer, through the innovative use of nanotechnology.

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
2,800+ scientific and medical posters
A library of 2,500+ scientific videos on LabTube
4,000+ scientific videos