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UCB's $1.53bn generics sale falls through

Advent and Avista Capita back away from bid to acquire Kremers Urban due to unanticipated conflict in timing

UCB 

The private equity buyers of UCB's US generics unit Kremers Urban Pharmaceuticals have backed away from the proposed $1.53bn deal.

Advent and Avista Capita announced the decision yesterday, blaming an unanticipated conflict in the timing of the acquisition, including its financing, following a regulatory stumble for Kremers Urban's extended-release formulation of methylphenidate hydrochloride for attention-deficit hyperactivity disorder (ADHD).

Shortly after the proposed acquisition was announced last month, Kremers revealed that the FDA had asked it to conduct an additional study to make sure its formulation was bioequivalent to Johnson & Johnson's Concerta (methylphenidate hydrochloride), the reference ADHD product.  Kremers Urban has already said it intends to perform the requested additional study.

"While we are working on clarifying the situation around methylphenidate ER we will continue the divestiture process for Kremers Urban," said UCB chief financial officer Detlef Thielgen in a statement.

When it announced the sale of the unit last month, UCB said it intended to use the proceeds from the sale to pay down debt and fund R&D projects.

Kremers Urban sell 20 specialty pharmaceutical products across a number of indications, including ADHD, gastroesophageal reflux disease, angina/hypertension and respiratory disease, and has built a profitable business focusing on high barrier to entry drugs, such as extended release formulations and less common delivery approaches such as patches, liquids and injectables.

In fact, the US unit is more profitable than UCB as a whole, which had led some analysts to question UCB's decision to sell off the business.

The Belgian company said the failure to push the deal through does not change its 2014 outlook, as "its intention to divest [the] US specialty generic business is unchanged."

It still expects 2014 revenues to be in the range of €3.15bn-€3.25bn with operating profit of €590m-€620m.

Article by
Phil Taylor

17th December 2014

From: Sales

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