Baxter CEO José Almeida told analysts last month the company was looking for manageable M&A deals and that sterile injectables was an area he is focused on. Now, it looks like the U.S. company is close to just such a deal for India’s Gland Pharma.
Sources are telling the Economic Times that Baxter ($BAX) and Chinese conglomerate Fosun Group were the only two of a handful of interested buyers to submit binding bids this week, putting a value of between $1.1 billion and $1.2 billion on the contract manufacturer. Private equity investor KKR owns about 40% of the company, with the rest owned by its founders. Sources said that the owners were hoping to get $1.5 billion for Gland and that Baxter was seen as the front-runner.
Deerfield, IL-based Baxter, which specializes in parenteral nutrition and intravenous solutions, already has three manufacturing sites in India that make large-volume parenterals and renal drugs. With Gland, it would pick up four more manufacturing facilities making sterile injectables, including oncology drugs.
During the earnings call, Almeida said that Baxter wants to do some M&A but “transformative M&A is not in the cards as we speak right now,” according to a Seeking Alpha transcript of the meeting. He said the company is instead looking at deals that are extensions of what it already does. “So the logical extension of that would be to go in an area that is strengthening those core competencies.” Almeida explained that sterile injectables fit that bill because Baxter is good with that technology.
Western drugmakers have found India to be a good place for deals in sterile injectables, an area of business that continues to see significant growth. Hospira, which Pfizer ($PFE) bought last year for $15 billion, has a large presence in India; both plants that it has built and bought there. It spent $200 million to get a injectables plant from India’s Orchid Chemicals & Pharmaceuticals in 2014, while Mylan ($MYL) laid out $1.6 billion for India’s Agila Specialties in 2013. That deal has been a mixed blessing for the drugmaker, which is now dealing with an FDA warning letter for three of the plants it picked up.
by Eric Palmer | May 12, 2016