Aspen Pharmaceuticals is snapping up the generics unit of Australia's troubled Sigma Pharmaceuticals for about $810 million (AUD $900 million) in a bid to globalize its manufacturing capabilities and get a leg up in the land of Oz.
By netting Sigma, Australia's largest pharmaceutical manufacturing business, South Africa-based Aspen gains an “established point of entry” to the Australian generics and over-the-counter sectors and a foundation for further development of its existing Asia Pacific business, it says.
The deal will also help Aspen attain the scale it needs to break into ranks of the world's top-ten largest generic drug manufacturers, a status that could help it gain access to new partnerships and distribution deals that may have been beyond reach before.
The two companies reached the deal after Aspen's bid for Sigma's entire business fell through earlier this year. Its consummation, following an acknowledgment by Sigma that it would have to sell at least some of its assets to service its mounting debt obligations, is largely perceived as a win for both companies. Now Sigma will be able to erase that debt, which totaled about $706 million (AUD $785 million) at the end of January 2010.
Such an outcome was not always apparent to Sigma's board and shareholders. The company's CEO and CFO both resigned their posts last spring in the wake of record losses created mostly by the pharmaceuticals unit, a business created when Sigma bought Arrow Pharmaceuticals in 2005.
Unburdened of its pharmaceutical business, Sigma will move ahead retaining just its health care distribution business, a group with both retail and wholesale operations serving pharmacists.
The deal is still subject to shareholder and regulatory approval. If finalized, it would bind Sigma not to compete with Aspen's pharmaceutical business for two years.
August 19, 2010