Par Pharmaceutical Companies Inc. (PRX) recently announced that it has entered into a definitive agreement to acquire Anchen Pharmaceuticals for $410 million in cash. The transaction, which is expected to close by the end of the year, will be immediately accretive to the earnings of 2011.
Anchen Pharma’s portfolio consists of five marketed products, 27 abbreviated new drug applications (ANDA) filed with the US Food and Drug Application (FDA), five of which are believed to be first-to-file, and about 26 products in development. Anchen plans to launch 8-10 of the generic products over the next two years.
We note that this acquisition will add to Par Pharma’s portfolio, helping boost the company’s revenues, which amounted to $224.2 million in the second quarter of fiscal 2011, 12.3% below the year-ago figure of $255.5 million. Lower sales of the company’s generic products primarily led to the decline. (Read our full coverage on the earnings at: Lower Spending Boosts Par Pharma)
We note, in a short span of time, this is the second acquisition by Par Pharma. In May 2011, the company had 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 Edict Pharmaceuticals transaction, which is scheduled to close by the end of 2011, is to be accretive to the earnings of 2013.
Edict Pharmaceuticals’ portfolio includes seven ANDAs filed with the FDA and one ANDA filed in the name of a development partner, along with 14 additional products in development.
Our View
We currently have a Neutral recommendation on par Pharma. The stock carries a Zacks #2 Rank (Buy rating) in the short-run. We note that Par Pharma currently has around 31 ANDAs pending approval with the FDA. Thirteen of these are expected to be first-to-file opportunities.
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