India's second-largest drugmaker, Dr Reddy's Laboratories Ltd, said it agreed to buy eight generic drugs from Teva Pharmaceutical Industries and Allergan Plc for $350 million in cash.
This marks Dr Reddy's largest-ever acquisition and comes at a time when the company has been facing slowing growth in the United States, its largest market, due to regulatory troubles and fewer new drug approvals. Some formerly lucrative emerging markets have also taken a hit over the past year and caused the company's March quarter profit to slump 86 per cent.
The drugs Dr Reddy's is buying are being divested by Israel-based Teva, the world's largest maker of generic drugs, to win US antitrust clearance for its $40.5 billion acquisition of Allergan's generic drugs portfolio. The sale to Dr Reddy's puts Teva a step closer to closing the Allergan deal.
The deal consists of generic drugs awaiting US approval, and some that are already on the market, including "complex generic products across diverse dosage forms", Dr Reddy's said in a statement. The branded versions of drugs under the deal had US sales of about $3.5 billion in the year to April 2016, the company said, citing healthcare research firm IMS Health.
Dr Reddy's said it plans to finance the deal with cash on hand and available borrowings under existing credit facilities. The acquisition is contingent on closing of the Teva-Allergan deal and approval of the US Federal Trade Commission, the country's antitrust regulator.