29-May-2014

Hikma Pharmaceuticals to pay US$300m for Bedford Laboratories

Hikma Pharmaceuticals, a multinational pharmaceutical group headquartered in Amman, Jordan, has agreed with Ben Venue Laboratories, a division of Boehringer Ingelheim, to buy the assets of Bedford Laboratories, its US generic injectables business.

Hikma will pay up to US$300m, comprising an upfront cash payment of $225m and a further $75m, subject to the achievement of performance-related milestones, over a period of five years.

As part of the deal, Hikma will also acquire substantially all of the assets of the Ben Venue manufacturing facility in Bedford, Ohio, adding one of the largest lyophilisation plants in the world and dedicated cytotoxic facilities.

The Bedford, Ohio plant is part of contract manufacturing organisation Ben Venue Labs, which Boehringer said it was closing in October 2013 after the cost of remediation needed to fix quality issues was deemed unsustainable.

The combination of these assets with Hikma’s existing global injectables platform will significantly strengthen its position as a leading generic injectables company in the US.

Bedford’s impressive product portfolio and deep pipeline will significantly increase the scale and scope of our rapidly growing US injectables business

Said Darwazah, Chief Executive of Hikma, said the Ben Venue manufacturing facility was one of the largest sterile injectable manufacturing sites in the world.

'Bedford’s impressive product portfolio and deep pipeline will significantly increase the scale and scope of our rapidly growing US injectables business,' he said.

'The large number of high value, niche and differentiated products we are acquiring will strengthen our market position in the US and will benefit patients by bringing back products to the market that are currently in short supply.

'I am confident that we have the technical capabilities and manufacturing expertise to successfully re-launch the acquired products over the next few years.'

In 2013, Hikma’s global injectables business generated revenue of $536m and accounted for 39% of total group sales. In May 2011, the company completed the acquisition of Baxter’s Multi-Source Injectables business (MSI), which established Hikma as the third-largest supplier by volume in the US generic injectables market, which is valued at around $7.6bn, and offers significant future growth opportunities.

The acquisition of Bedford Laboratories adds a portfolio of 84 products, across a number of therapeutic categories, which combined with Hikma’s 63 existing marketed products, creates the broadest portfolio of generic injectable products in the US market.

Bedford also brings an R&D pipeline of 27 products, of which 16 are filed and pending approval from the US FDA.

Hikma will transfer the acquired products to its US FDA approved facilities in the US, Portugal and Germany, with 20 products transferred initially for re-launch to the market between 2015 and 2017, with the potential to transfer further products thereafter. The company said it would prioritise the products based on the strength of the market need, the ease of transfer, and the expected contribution to profit.

In 2013, the assets subject to the transaction generated revenue of $19m and negative EBITDA of $22m, which reflects the limited sales of Bedford’s products following the manufacturing issues at Ben Venue, which stopped production in 2013.

Hikma expects the acquired assets to generate limited revenue in 2014 and 2015 while products are being transferred to its manufacturing sites.

By 2017, the company expects revenue from the acquired assets to have increased significantly to around $150m, with strong growth potential.

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