Novartis is the latest company to jump on the acquisition merry-go-round by agreeing to buy US dermatology generics specialist Fougera Pharmaceuticals.
The Swiss major is paying just under $1.53 billion in cash for the New York-based firm, which is owned by a consortium of private equity funds led by Nordic Capital, Credit Suisse's DLJ Merchant Banking affiliate and Avista Capital Partners. The acquisition makes Novartis' Sandoz unit "the number one generic dermatology medicines company globally and in the USA".
Fougera had sales of $429 million last year and employs 700 people. It has 45 products and also has a branded business, PharmaDerm, which markets 17 treatments. The company added that "numerous launches" are planned for 2012.
Novartis noted that US dermatology generics is "an attractive industry segment", worth $2.1 billion and is enjoying strong double-digit growth. Combined Fougera/Sandoz sales in this area are worth around $620 million, and come primarily from the USA, but plans are in place to bring the products to new markets; Sandoz has a presence in over 130 countries.
Jeff George, global head of Sandoz, said the deal strengthens the firm's "differentiated products strategy [and] brings us valuable technical capabilities in the area of topical dermatological products, particularly in the development and manufacturing of semi-solid forms such as creams and ointments". The president of Sandoz US, Don DeGolyer, noted that the companies serve many of the same customers in the country, "creating significant sales and cost synergies".
Based on Fougera's 2011 earnings before interest, taxes, depreciation, and amortisation of $173 million, the acquisition represents a multiple of 8.8 times. The transaction, The transaction, which Novartis says meets its "strict financial criteria for acquisitions relative to targeted cash flow return on investment metrics" is expected to be accretive to core earnings per share and will be financed from existing cash resources.