Par Pharmaceutical Companies Inc. (PRX) recently announced that it has entered into a definitive agreement to acquire India-based generic company Edict Pharmaceuticals for up to $37.6 million in cash. Par Pharma will also repay a certain amount of debt as part of the deal.
The company expects the transaction, which is scheduled to close by the end of 2011, to be accretive in 2013.
Edict Pharmaceuticals’ portfolio includes 7 Abbreviated New Drug Applications (ANDAs) filed with the US Food and Drug Administration (FDA) and 1 ANDA filed in the name of a development partner, along with 14 additional products in development.
We note that this acquisition will help boost Par Pharma’s revenues. The company recorded revenues of $233.0 million in the first quarter of fiscal 2011, 20.9% below the year-ago figure of $291.9 million. Lower sales of the company’s generic products primarily led to the decline.
Our View
We currently have a Neutral recommendation on Par Pharma, which carries a Zacks #3 Rank (short-term Hold rating). We note that the company currently has around 30 ANDAs pending approval with the FDA. 12 of these are expected to be first-to-file opportunities, representing branded sales of about $8.0 billion.
We believe that even though competition has depleted sales of several generic products including the company’s generic version of AstraZeneca’s (AZN) Toprol XL, Oravig and Zuplenz (both launched in the second half of 2010) as well as propafenone and amlodipine/benazepril (both launched in the first quarter of 2011) will help drive the top line.
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