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Boehringer Ingelheim to sell US injectable generics business to Hikma for up to $300 million


Boehringer Ingelheim's Ben Venue Laboratories division agreed to sell its US injectable generics business Bedford Laboratories to Hikma Pharmaceuticals for up to $300 million, the companies reported Wednesday. The deal includes an upfront cash payment of $225 million and a further $75 million in contingent cash payments linked to performance-related milestones over a period of five years.

Further, Hikma entered into an exclusivity arrangement with Boehringer Ingelheim "to acquire substantially all" assets of the Ben Venue manufacturing facility in Bedford, Ohio. Boehringer Ingelheim announced plans in October that it would cease production at the facility by the end of 2013 as a result of manufacturing issues, adding that it was "exploring strategic options" to maintain the supply of products manufactured by the unit. "We believe that this is a positive development, allowing Hikma to leverage its existing infrastructure and manufacturing capabilities to re-introduce important products to the US market," commented Paul Fonteyne, chief executive of Boehringer Ingelheim's US operations.

Hikma CEO Said Darwazah 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." The company noted that the acquired assets generated $19 million in revenue in 2013, but negative earnings of $22 million due to manufacturing problems at the Ben Venue site.

Hikma indicated that the acquisition would be slightly dilutive to earnings in 2014 and 2015 while products are being transferred to its manufacturing sites in the US, Portugal and Germany, with strong earnings growth thereafter. The drugmaker said it expects that about 20 products will initially be re-launched between 2015 and 2017, with the potential for more afterwards. Further, products will be prioritised on the basis of "strength of the market need, the ease of transfer and the expected gross margin contribution." Additionally, the company projects that the acquired assets will generate about $150 million in revenue by 2017.

Hikma's global injectables business generated sales of $536 million last year, accounting for 39 percent of its revenue. In 2011, the company completed the acquisition of Baxter's US generic injectables unit, with the Federal Trade Commission later approving a final order settling charges that the purchase of Baxter's assets was anti-competitive and would have resulted in higher prices for the generic injectable drugs phenytoin and promethazine.

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