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Dr. Reddys Labs announced yesterday that they will be acquiring the injectables portfolio of Eton Pharma for a consideration of $50 million.
For the unversed, Dr. Reddys Labs (DRL) is one of India's oldest pharmaceutical companies which was founded by Dr. K. Anji Reddy in 1984. The company's main purpose is to make medicines cheaper and readily available. The company manages several brands like Omez, Nise, Stamlo, Clamp, Econorm, Razo, and Ketorol.
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According to the company, the portfolio includes the Biorphen® (phenylephrine hydrochloride) Injection and Rezipres®, (ephedrine hydrochloride) Injection NDAs with nine separate combinations of strengths and presentations, and first-to-file approved ANDA for cysteine hydrochloride for the U.S.
Only one strength of both Biorphen® & Rezipres® is commercially available in the US. This acquisition will support Dr. Reddy's business in the US with limited competition and assist the company's expansion efforts. The TAM (Total Addressable Market) of these products was estimated to be $174 million for the calendar year ended in April 2022 as per IQVIA.
The consideration of the deal i.e. $50 million will be paid as follows: $5 million upfront and the balance $45 million in contingent payments.
“Long before the COVID-19 pandemic, there have been concerns about access to some critical care products for hospitals and health systems. This acquisition provides our North American organization with a foundational footprint to help address products that are not always readily available for patients. For these and many other reasons, I believe we are well-positioned to integrate the portfolio and grow the business,” says Marc Kikuchi, Chief Executive Officer, North America Generics, Dr. Reddy's.
The shares of DRL have not recovered to their original levels since they declined 10.49% in July 2021 after it announced that it could face civil/criminal action in the US over a whistleblower complaint.
The share broke through the Rs 5,000 mark that day and it has not been able to maintain itself above it since then. It closed at Rs 4,294.90 per share yesterday, but brokerages like Jefferies and Motilal Oswal have maintained a Buy rating on the share.
Article by Aman Agarwal.
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