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Injectables land-grab set to continue as Hikma reports offers

Comes just days after Mylan strikes a major deal to increase its presence in the area

Hikma has said it is looking into the future of its injectable drugs unit after overtures from possible buyers, just days after Mylan agreed a $1.6bn deal to buy Strides Arcolab's injectables business.

In a brief statement issued on Friday, Hikma said it had received a number of unsolicited enquiries for its unit and as a result was conducting a "review of strategic options".

Having suggested a preliminary price estimate of $1.6bn for Hikma's unit last week, analysts at Panmure Gordon upgraded that to $2.2bn this morning, pointing to an FDA review of a facility owned by competitor Hospira that could limit its manufacturing capacity.

"We have received a number of unsolicited expressions of interest in our injectables business and will consider the best option for shareholders," said Hikma's chief executive Said Darwazah.

Panmure Gordon forecast that in 2013 Hikma will generate around $524m of injectables revenues around 42 per cent of total turnover, with the unit accounting for 45 per cent of group profit at an estimated $110m. 

Growth for injectable medicines is expected to outstrip the overall pharmaceuticals market in the coming years, in part because of opportunities presented by current drug shortages but also other factors such as a shift towards biologic therapies.

Historically, high competition in injectables reduced prices and encouraged pharma companies to exit the sector, which along with recent quality control issues in manufacturing has resulted in shortages of key medicines such as certain cancer drugs. 

Mylan said when it announced its deal for Strides Arcolab's Agila unit that it expects the injectable drug market to grow 13 per cent a year through 2017, some three to four times that of the overall drug market, and that potential has prompted a lot of merger & acquisition (M&A) activity in recent years.

The offer for Agila comes after Mylan's $550m acquisition of Bioniche and Hikma's own $112m deal for Baxter's MSI unit in 2010, as well as Hospira's $200m purchase last year of Orchid Chemicals & Pharmaceuticals sterile injectable plant in Aurangabad, India, and other big transactions in the past such as the $565m Sandoz paid for injectables specialist Sabex in 2004.

4th March 2013

From: Research, Sales

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