In a bid to further strengthen its dermatology portfolio, Valeant Pharmaceuticals International, Inc. (VRX) entered into a definitive agreement to acquire privately-held PreCision Dermatology, Inc. for $475 million in cash.
The acquisition consideration also includes an additional $25 million payable upon the achievement of a sales-based milestones.
We note that PreCision has dermatology products like Locoid, Hylatopic, Clindagel, and BenzEFoam in its kitty. PreCision expects to generate revenues of $130 million in 2014.
Valeant expects to close the transaction in the first half of 2014. Post the closing of the acquisition, the transaction is expected to be immediately accretive to the bottom line on a cash basis.
Dermatology is the key focal area for Valeant and the Precision acquisition will broaden its portfolio.
We remind investors that Valeant, a Canada-based specialty pharmaceutical company, has been quite aggressive on the acquisition front in the last two years contributing to its solid growth.
Last month, Valeant acquired Solta Medical for $2.92 per share in cash, or approximately $250 million. We note that Solta designs, develops, manufactures, and markets energy-based medical device systems for aesthetic applications.
Earlier, in Apr 2013, Valeant acquired Obagi Medical Products for $440 million following a bidding war with Merz Pharma Group. We note that Obagi develops, markets and sells products, which prevent or improve the most common and visible skin disorders. The products include leading dermatology brands such as Obagi Nu-Derm, Condition & Enhance, Obagi-C Rx, ELASTIDerm and CLENZIDerm.
In Dec 2012, Valeant acquired all of the outstanding common stock of Medicis Pharmaceutical Corporation for approximately $2.6 billion. The erstwhile Medicis Pharma focused on the development and marketing of products for the treatment of dermatological and aesthetic conditions in the U.S.
Meanwhile, apart from dermatology, Valeant is also keen to develop its portfolio in the ophthalmology arena as well. In Aug 2013, Valeant acquired Bausch + Lomb Holdings Inc. for $8.7 billion in cash.
We are impressed by the company’s broad product portfolio, strategic acquisitions and synergies obtained from the same.
Valeant currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the pharmaceutical industry include Salix Pharmaceuticals (SLXP), Endocyte, Inc. (ECYT) and Lannett Company, Inc. (LCI). All three carry a Zacks Rank #1 (Strong Buy).
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