Domestic drug maker Wockhardt said on Wednesday it acquired US-based speciality drugs company Morton Grove Pharmaceuticals, which has annual sales of $52 million. Though the company did not disclose the price, sources in the know said Wockhardt paid nearly $38 million for the Illinois-based company.
This ends a long wait for the Mumbai-based drug maker, which had been scouting for acquisition in the US market for over two years, and also brings it closer to its Indian rival Cipla, which had signed a supply agreement with Morton Grove in 2004.
This acquisition will allow Wockhardt to expand its operation and product portfolio in the world’s largest pharmaceutical market. Shearman & Sterling, LLP advised Wockhardt on this deal while ABN AMRO represented US-based private equity investment firm GTCR, which holds a majority stake in Morton Grove.
Although Wockhardt did not disclose any details on Morton Grove’s profitability, the US company is reported to have witnessed a dramatic decrease in sales over the last two years, which may in part explain why the company’s valuation is lower than its sales. “Considering the low valuation, Wockhardt may need to transfer manufacturing to India to improve profitability,” said Surjit Pal, senior analyst with UTI Securities.
While most of the company’s products manufactured at the company’s 1,25,000 sq ft facility in Illinois, Morton Grove had signed a long-term exclusive agreement with domestic pharma major Cipla, for the development, manufacturing and supply of certain drugs. While details of the agreement had not been disclosed, it is known that these products are yet to be launched, though filings have already been made.
“Morton Groves markets specialised formulations, where typically competition is lower than in traditional generic segments,” said Vijay Karwal ABN-AMRO North America executive director (healthcare banking).
Source: Economic Times