Sun Pharma said on Thursday it will acquire US dermatology firm Dusa Pharmaceuticals, in a transaction valued at $230 million or R1,249 crore in cash. This will mark Sun Pharma?s third major move into the US through an acquisition, after buying Israel?s Taro, which has a large US presence, and Caraco. Sun Pharma had R6,000 crore of cash in hand as of September 2012.
The deal also brings into focus aggressive moves by Indian pharma companies to firm up their presence in the world?s largest drug market at a time of low asset prices. In the September quarter, Sun Pharma sold $244 million worth of drugs in the US, a growth of 38% over the previous year. For the fiscal first half ended September, it got 43% of its revenues from the US market.
Sun, which has a market value of $13.3 billion, will make a tender offer of $8 per share in cash for Dusa, a premium of 38% to Dusa?s closing price on Wednesday. The US company, focused on skin disease treatment, had revenues of $45 million for the year ended December, 2011.
?The dermatology segment has been an attractive point of entry to pharma companies, both in the US and in India,? said Hitesh Sharma, partner and national life sciences leader with Ernst & Young.
Industry sources said that Sun Pharma, which is generally cautious with its moves in the inorganic space, would have considered all the future growth aspects before betting on the derma company.
?Dusa has proven technical capabilities in photodynamic skin treatments, with USFDA-approved manufacturing. DUSA?s business brings us an entry into dermatological treatment devices, where we see good growth opportunities,? Dilip Shanghvi, Sun’s MD said.
Dusa is focused on developing and marketing its Levulan photodynamic therapy platform (PDT), a media release said.
?We believe this transaction brings significant value to Dusa shareholders and are pleased that Sun Pharma recognised the value that has been created. The entire team at Dusa has built an excellent franchise around Levulan PDT and continues to grow its presence in the dermatology space,? said stated Robert Doman, president and CEO of Dusa.
The closing of the tender offer will be subject to certain conditions, including the tender of a number of Dusa shares that represent at least a majority of the total number of Dusa’s outstanding shares. Upon the completion of the tender offer, Sun Pharma will acquire all remaining shares at the same price of $80 per share through a second-step merger, subject to approvals as may be necessary.
Leerink Swann LLC acted as exclusive financial advisor and Reed Smith LLP acted as legal advisor to DUSA Pharmaceuticals.
Dusa is a market leader in PDT, marketing products to dermatologists to treat patients with minimally to moderately thick actinic keratoses (AKs) of the face or scalp, a media release said.
Sun Pharma’s net profit for the quarter ended September 30 fell 46.5% to Rs 319.64 crore after the company made a Rs 584 crore provision towards potential damages in respect of patent infringement litigation with Wyeth related to generic versions of Protonix. Shares of the company were marginally down to close at Rs 696.15 on the BSE on Thursday.
