Hikma builds in US injectables sector with Baxter unit buy
Baxter said the divestiture, worth around $112m (€80m) and expected to complete in the next three months, will allow it to refocus resources on its formulation development activities and pharmaceutical packaging technology offering.
For its money Hikma will gain a manufacturing plant in Cherry Hill, New Jersey, formerly owned by Wyeth, and a warehousing and distribution centre in Memphis, Tennessee at which Baxter currently employs 750 people.
The business, which makes generic anti-infectives, pain drugs and anti-emetic products primarily for the US market and generated revenues of $179m last year, will be operated by Hikma’s West-Ward Pharmaceuticals subsidiary.
Hikma CEO Said Darwazah, explained the motivation for the purchase, predicting in an interview with the UK’s Financial Times that injectable medicines will become a dominant part of the firm’s business.
He went on to explain that, to facilitate this growth, Hikma needs to overcome the technological and regulatory barriers to entry citing the US purchase as a way of achieving this in as efficient a way as possible.
The acquisition, the third Hikma will make this year behind deals in Tunisia and Algeria, may not be the last according to Darwazah who said: “As we move forward, acquisitions become much more of an important part of the strategy if we want to continue growing.”
News of the sale comes just weeks after Baxter reorganised its delivery technology and renal products divisions, combining the units into its new Medical products division it said would reduce costs and drive productivity.
This in turn came hot on the heels of a strong set of Q3 financials for Baxter, which said that higher revenues from its delivery systems business, part of the medical products unit, had been a key driver.
Sale of delivery systems for the three month period brought in some $1.23bn, up 5 per cent on the year earlier which, combined with $1.4bn from its bioscience business, left Baxter with revenue of $3.22bn, up 3 per cent on last year.
The other important factors in Baxter’s Q3 performance was, according to the US firm, its continued efforts to refocus its business and reduce costs.