Novartis has signed definitive agreements to acquire 100% of Hexal, Germany’s number two generics company, and a 67.7% stake in Eon Labs, a growing US generics company that has a strategic partnership with Hexal. The two companies will be integrated into Novartis’ Sandoz division.
In addition, Novartis will launch a tender offer to acquire the remaining 31.9 million fully diluted shares (34.6%) in Eon Labs for $31.00 per share.
The acquisitions bring together three generics companies that combine Sandoz’s global geographic presence and expertise in anti-infectives, Hexal’s leadership in Germany and strong track record of successful product development, and Eon Labs’ strong position in the US for ‘difficult-to-make’ generics.
Sandoz, after the closing of these transactions, will be the global leader in generics with combined pro forma 2004 sales of $5.1 billion, a portfolio of over 600 active ingredients in more than 5,000 dosage forms and more than 20,000 employees. Annual cost synergies totaling $200 million are anticipated within three years after closing, with 50% in the first 18 months.
The new company will be number one or number two in major markets, particularly in the US, the world’s largest generics market, and Germany, and will have a strong foothold in India, China and Japan, as well as Latin America.
The combined pipeline covers nearly all of the major molecules predicted to lose patent protection during the next few years, representing an estimated $69 billion in US product sales between 2005 and 2009.
Through this acquisition, Sandoz will also significantly strengthen its technology base, particularly in the application of transdermal patches, inhalation products, sustained-release implants and multi-particulate drug delivery dosage forms. Sandoz will also expand its strong capabilities in biopharmaceuticals and reinforce its vertical integration in active pharmaceutical ingredient manufacturing.
“The acquisitions of Hexal AG and Eon Labs will significantly strengthen our geographic presence and product portfolio, our development and registration capabilities, and increase our scale to rapidly bring a broad array of generic products to patients,” said Dr Daniel Vasella, chairman and CEO of Novartis.
“These acquisitions expand our medicine-based business portfolio, providing synergies with our branded medicines in dealing with large purchasers and in manufacturing.”