Hikma Pharmaceuticals to expand injectables business with acquisition

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LONDON (ShareCast) - Hikma Pharmaceuticals (LSE: HIK.L - news) has agreed to acquire certain key assets of the Bedford Laboratories generic injectables business from US-based Ben Venue Laboratories for up to 300m dollars.

The purchase will be made for an initial $225m upfront cash payment as well as up to a further $75m in contingent cash payments during the following five-year period.

Bedford is a generic injectables company with the third largest portfolio of generic injectable products in the US.

The acquired assets include a large product portfolio, intellectual property rights, contracts for products marketed under license, raw material inventories, strong research and development and business development pipelines and a number of employees across key business functions.

Hikma expects "limited" revenue from the acquired assets in 2014 and 2015, while products are being transferred to Hikma's manufacturing sites, but that revenue will increase to around $150m by 2017, with a slightly dilutive effect on adjusted earnings per share (EPS) in both 2014 and 2015 and strongly accretive to adjusted EPS from 2016 onwards.

FTSE 250-listed Hikma has also agreed with Ben Venue's parent, Boehringer Ingelheim, to potentially acquire the majority of the assets of the Ben Venue manufacturing facility in Ohio, one of the largest sterile injectable manufacturing sites in the world.

"The combination of these assets with Hikma's existing global Injectables platform will significantly strengthen Hikma's position as a leading generic injectables company in the US," the company said.

Chief Executive Officer Said Darwazah told investors the move was a "strategically important investment" in the the business that would significantly increase its scale and scope.

"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," he said.

In 2013, due to manufacturing issues limiting sales, the Bedford assets associated with the transaction generated revenue of $19m and losses before interest, tax, depreciation and amortisation of $22m.

The transaction is expected to be completed in the second half of 2014.

Shares climbed 0.99% to 1,631p by 12:45.

NR