Dr Reddy's Acquires Mayne Pharma's USA Prescription Portfolio For $105 Mn

Dr Reddy’s Laboratories (DRL) has entered into a definitive agreement to acquire the US generic prescription product portfolio of Australia-based Mayne Pharma Group for $90 million (Rs 738 crore) upfront and contingent payments of up to $15 million (Rs 123 crore).

The acquisition will complement DRL’s US retail prescription pharmaceutical business with limited competition products. The value of the total addressable market for the pipeline and approved non-marketed products in the US is approximately $3.6 billion for the calendar year ending December 2022, according to IQVIA.

DRL’s stock was down almost 3 percent in morning trade.

DRL SA, a wholly-owned subsidiary of Hyderabad-based DRL is set to acquire the US generic prescription product portfolio of Salisbury, Australia-based Mayne Pharma Group.

The portfolio includes approximately 45 commercial products, four pipeline products, and 40 approved non-marketed products, including a number of generic products focused on women’s health. For the financial period ended June 30, 2022, Mayne Pharma reported total revenue of $111 million for the acquired portfolio.

Approved high-value products include a hormonal vaginal ring, a birth control pill, and a cardiovascular product. “Under the terms of the agreement, DRL will acquire the portfolio for an upfront payment of approximately $90 million in cash, contingent payments of up to $15 million, consideration towards inventory, and credits for certain accrued channel liabilities to be determined on the closing date,” the company said in a statement.

During the third-quarter earnings call the company indicated that it is not targeting any large acquisitions but is rather looking at acquiring complementary products or companies.

The closing of the transaction is subject to the satisfactory completion of customary closing conditions including the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), as amended.

Erez Israeli, Chief Executive Officer, DRL, said, “The US has always been an important market for us. The portfolio of products acquired from Mayne Pharma is a strategic fit with our growth objectives. The portfolio includes some high entry-barrier products. It also complements our existing portfolio by introducing products focused on women’s health. Our strong balance sheet enables us to acquire products of strategic importance to strengthen our base business and build for long-term growth.”

According to analysts, the timing is crucial for picking product filings and launching niche and differentiated products in the US market. In a recent report, Dolat Analysis and Research Themes analysts have pointed out that the US generic market is facing a confluence of headwinds with the number of filers per generic drug increasing, higher price erosion over the last five years, cost escalation on the raw materials, power and transportation hurting the US more than other businesses etc.

“In the above scenario, we believe the timing is crucial for picking product filings and launching niche and differentiated products away from the crowd and building a franchise on the specialty side where there are barriers to entry to even out some of the above headwinds,” the brokerage had said.

Marc Kikuchi, Chief Executive Officer, North America business, DRL, said, “This important acquisition provides our North America organization with a significant foothold in the women’s health space. The acquisition is in line with our stated strategy to enhance our portfolio in our chosen growth markets. We are well-positioned to successfully integrate the portfolio and grow the business.”