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Watson buys Australian generics maker

US-based Generics company to pay AU$375m for Ascent Pharmahealth

Watson Pharmaceuticals has said it will buy Australian generics company Ascent Pharmahealth from Indian owner Strides Arcolab.

Watson is paying AU$375m (about $390m) for the company, which employs about 300 staff and sells 116 product lines across the prescription and over-the-counter (OTC) medicine categories.

Buying Ascent will make Watson a top five generics company in Australia with a presence in a number of southeast Asian markets, including Singapore, where it operates a manufacturing facility, as well as Malaysia, Hong Kong, Vietnam and Thailand.

“With this acquisition … we have a larger portfolio of products and will gain a broader pipeline of products to support continued growth,” said Watson chief executive Paul Bisaro.

The Australian firm had a turnover of approximately AU$150m in 2011, and has the second-largest pharmacy field force in its home market.

Watson has been following a growth trajectory in recent years and is now the third-largest generic manufacturer in the US, with aspirations to expand a small but growing branded medicines business.

The company also signed a worldwide deal with Amgen last month to develop and market biosimilar cancer medicines.

Preliminary financial results for 2011 indicate that revenues rose 28 per cent, with generics revenues of around $3.6bn, branded sales of $440m and distribution revenues of $776m, while earnings climbed 39 per cent.

Watson now expects 2012 revenues to rise by more than 10 per cent to $5.3bn, with the Ascent purchase immediately accretive to earnings.

Meanwhile, Strides Arcolab has made no secret of its intention to exit some of its lower-margin businesses in order to focus on more profitable lines such as sterile injectable drugs.

The Indian company said it would use the proceeds from the sale to slim down its debt of around $500m, with $120m used for redemption of a convertible bond due in June 2012.

25th January 2012

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