Belgium's UCB has had a tough time unloading its U.S. generic drug business, calling off a sale last year amid regulatory pushback over one of the unit's products. But now, the company is closing that chapter. UCB is selling the business to Lannett for $1.23 billion to lighten its load and refocus on high-growth areas.
Lannett ($LCI) will reap quick payoffs from the deal, including tax benefits of more than $100 million. The U.S. generics maker also expects to see a mid- to high-single digit increase in its adjusted 2016 profit, and a 20% to 25% jump in 2017. Both companies' boards unanimously approved the sale, and the deal is expected to close during Q4 2015.
Picking up the UCB unit, Kremers Urban Pharmaceuticals, "significantly enhances" Lannett's opportunities for growth by adding "a number of large market opportunity and complementary product candidates" to its pipeline, Lannett CEO Arthur Bedrosian said in a statement. The company will get its hands on 11 Kremers products awaiting FDA approval and 17 candidates under development, as well as a 381,000-square-foot manufacturing facility in Indiana.
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| Lannett CEO Arthur Bedrosian |
"KU brings considerable manufacturing capacity, a first class research and development team and the potential for advancing our active pharmaceutical ingredients business," Bedrosian said.
A deal with Lannett also means big things for UCB, which last year ended its proposed $1.53 billion sale to private equity firms Advent International and Avista Capital Partners. The deal fell apart after the FDA requested additional studies on Kremers' copy of Johnson & Johnson's ($JNJ) Concerta pill for ADHD.
Eager to put the drama behind it, Kremers in June submitted final results from new studies showing that its Concerta knockoffs work the same as the original med. Under the generic's current rating, Kremers' tablets can be prescribed but not automatically substituted for Concerta, The Wall Street Journal points out. If the FDA restores the substitutable rating for the med, UCB could get contingency payments in addition to the $1.23 billion up-front payment, "under sales and timing thresholds," the company said in a statement.
Meanwhile, Brussels-based UCB continues to embark on slimdown regimens to focus on core businesses such as neurology and immunology. In April, the company sold some of its branded products in Asia to Dr. Reddy's Laboratories for $128 million to focus on its neurology portfolio in India.
- read Lannett's statement
- here's the WSJ story (sub. req.)
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