Valeant divesting non-core Synergetics CMO business
In October 2015, Valeant completed its acquisition of Missouri-based precision surgical devices maker Synergetics for around $166m (€150m) in order to boost its Bausch + Lomb subsidiary’s presence in the field of vitreoretinal surgery.
But five months on and the firm said that it has sold Synergetics’ contract manufacturing business to with the sale expected to close in the second quarter.
Valeant’s Michael Pearson - who has resumed his position as CEO following illness late last year – said in a conference call to discuss Q4 2015 results the unit is being divested because it is not core to Valeant’s business.
“When we bought Synergetics the part that we [were] interested in was strategic, it was the Ophthalmology [assests] versus the franchise,” he said (transcript here).
“What we sold was a contract manufacturing and surgical neurology which is not an area that we compete in, we had no salesforce. And rather than build the salesforce and get into entirely new area, we ended up selling it to a company that was in that area.”
Michigan-based Stryker Corporation announced it would be picking up all of the assets associated with Synergetics USA last month but the financials were not revealed.
Pearson said the sale “is an example of sort of a non-strategic assets that [it was] able to monetise” and pushed the net transaction for the Synergetics deal down to less than $15m, implying Stryker will pay upwards of $150m for the business.
Synergetics is just one of the 23 acquisitions Valeant has made since 2013. Just last year, the firm acquired, among others, Dendreon for $495m, Salix for $14.5bn, Amoun Pharmaceuticals for $800m, and ‘female-Viagra’ maker Sprout for $1bn.
Valeant has faced a number of "challenges" in recent months, including: accruing debts of $31bn; an investigation into its operations by the SEC; and allegations surrounding misleading sales practices.
While Pearson said in a statement these challenges “are not yet behind us,” he assured investors the company will avoid bankruptcy.
“We have assumed lower growth in our US dermatology, gastrointestinal, and woman's health portfolios, as well as certain geographies like Western Europe, while keeping our expenses largely unchanged.
“We plan to work hard to improve these metrics by delivering higher revenues and reducing our costs and, if successful, we hope to beat this guidance in the quarters to come. In the meantime, we are comfortable with our current liquidity position and cash flow generation for the rest of the year, and remain well positioned to meet our obligations.”
CORRECTION - The original article said Valeant was selling Sterimedix. Sterimedic is not the contract manufacturing wing of Synergetics but rather a medical device company that designs, manufactures, and markets innovative surgical devices for ophthalmic and neurosurgical applications bought by Synergetics in 2014. The business, based in the UK, will remain with Valeant.