Salix latest purchase by Valeant after Dendreon deal

By Fiona BARRY

- Last updated on GMT

Valeant's CEO says gastrointestinal indications are underserved. (Image: Robert McDonald)
Valeant's CEO says gastrointestinal indications are underserved. (Image: Robert McDonald)
Valeant has signed a $14.5bn deal to acquire GI drugmaker Salix days after agreeing to purchase Provenge-maker Dendreon.

The Canada-based multinational will buy Salix Pharmaceuticals for $158 per share, in cash only. Combined with Salix’s debt and any cash on hand, the transaction is valued at about $10.1bn.

The mid-sized North Carolina firm earns half its revenue from Xifaxan (rifaximin), a treatment for travellers’ diarrhoea and hepatic encephalopathy (HE).

Valeant CEO Mike Pearson told investors he expects swift approval of the drug for IBS-D (irritable bowel syndrome with diarrhoea) indications, as well as authorisation of Relistor Oral (previously an injection for constipation) and the launch of Uceris foam (a steroid for ulcerative colitis) in the near future.

Salix’s portfolio of 22 gastrointestinal products also includes the anti-inflammatory Apriso, as well as pipeline assets. 

GI: go!

In an earnings call on Monday, Valeant CEO Mike Pearson outlined his motives for pursuing gastrointestinal indications, a low priority for most other pharmaceutical companies.

The growing GI market has “attractive sub-segments​” and deals with diseases that are typically chronic and damage patients’ quality of life, yet is significantly undertreated, he said.

The products have a favourable reimbursement status with payers. We also believe Salix's products and the entire GI therapeutic area provide an opportunity for low-risk innovation. GI has above-average prescription growth rate compared to other therapeutic areas.​”

Laurie Little, Valeant spokeswoman, told more small, bolt-on mergers are part of the company’s long-term acquisition plan.

Job cuts?

Valeant said it expects cost savings above $500m from company synergies within six months. While the company stressed it does not plan to cut jobs from Salix’s Specialty Sales Forces or its Hospital, Key Account and Field Reimbursement Teams, the “optimal size​” of Salix’s Primary Care Sales team will be determined before the deal is closed, it said.

 A spokesperson did not comment on whether Salix’s R&D divisions will see downsizing. The  company owns no manufacturing facilities.

Valeant lost out to Actavis​ in its bid to acquire Allergan last year​, but on January 29 signed a deal to buy Dendreon, including its lead product Provenge.

UK drug company Shire was considering making an offer to acquire Salix last week, and Endo International “expressed interest but was rebuffed by Salix,​” Reuters reported sources as saying.

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