Biocon - Biocon to buy US firm for $400 mn

The acquisition of the pharma distribution firm may be announced along with Biocon’s fourth quarter results

After gaining a foothold in the European market with the acquisition of German drug marketing firm AxiCorp GmbH in February, India’s Biocon Ltd now has set its sights on the US pharma distribution market with a deal valued at about $400 million (Rs1,595 crore).

The Bangalore-based biotech firm has been scouting for an acquisition in the US that will sell its pharmaceutical products such as generics, biosimilars and biologics in the world’s largest drug market.

“The deal, if signed, will be Biocon’s second and the largest overseas acquisition in the marketing space,” said a person familiar with the development who did not wish to be identified.
“If everything goes smoothly...the company may even announce the deal along with its fourth quarter results on 22 April,” this person added. A Biocon spokesperson declined to comment as the firm is in the silent period ahead of the announcement of its quarterly results in keeping with the guidelines of stock market regulator Securities and Exchange Board of India (Sebi). Earlier, the firm had mandated the investment banking arm of Ernst and Young, the global accounting and financial services firm, for carrying out a due-diligence of potential acquisitions.

In an interview on 6 November, Biocon chairman and managing director Kiran Mazumdar-Shaw had said the firm was considering buying pharma distribution firms in the US and Europe’s top markets. “Since marketing of biopharmaceuticals, especially insulin products, needs special expertise and regional experience, acquiring such infrastructure would be an ideal option,” she had said then.

In February, Biocon announced that it had agreed to buy a 70% stake in AxiCorp for €30 million, expanding its drug marketing network into Germany and the rest of Europe. Allegro Capital was the financial adviser to Biocon. Part of the funds for these acquisitions are coming from the sale of the firm’s enzymes business last year. In July, Biocon sold the business to Denmark-based Novozymes A/S for $115 million (Rs465 crore then). The company had also raised Rs315 crore from its public issue in March 2004. Its current market capitalization on Indian bourses is about Rs4,304 crore. “Our strategy has been to become a dedicated biopharmaceuticals company with strong research focus and global presence. So, we will slowly move away from the generic business and the money that we could generate from these divestments we will re-invest in technologies and marketing infrastructure in biopharma space,” Mazumdar-Shaw had said in November, explaining Biocon’s plan to expand its biopharmaceutical business through acquisitions. In the research area, Biocon had announced its first overseas acquisition, of US-based Nobex Corp.’s research assets for a little more than $5 million, in 2006. Biocon was the first Indian insulin producer to seek approval from the US Food and Drug Administration, that country’s drug regulator. The company has also presented the results of early clinical studies on its oral insulin product IN-105 to the European Association for Study of Diabetes. Its biotech cancer drug BIOMab-EGFR, originally licensed from Cuba’s CIMAB, is also expected to receive marketing approvals for the European markets soon. Biocon is also in the process of setting up a joint venture company in Dubai, along with Abu Dhabi-based drug maker Neopharma, to develop and market biopharmaceutical products for treating diseases such as cancer, diabetes, obesity and heart ailments in the West Asian market.

http://www.livemint.com/2008/04/14012855/Biocon-to-buy-US-firm-for-400.html