Fresenius Medical Care AG & Co. KGaA (NYSE: FMS) has been a busy deal maker. In 2016, its subsidiary Fresenius Helios bought the Spanish hospital chain Quironsalud for $6.5 billion, its Renal Care division acquired the rights to a chronic kidney disease drug for up to $282 million, and then a German-based cardiovascular medical device company for an undisclosed price. The company also picked up dialysis clinics throughout India and New York State, and other drug licenses in the meantime.
Now, it has turned its attention to strengthening Fresenius Kabi, its sterile injectable medicines subsidiary.
Biosimilars are a fast-growing segment within the pharmaceutical market, and some of the largest biological branded products will go off patent over the next few years. On April 24th, 2017, Merck KGaA divested its biosimilars business to Fresenius Kabi for $186 million (€170 million) with potential milestone payments of up to $546.5 million (€500 million).
Merck’s unit has a portfolio focused on oncology and inflammatory disorders, and will continue to operate in these areas following the transaction. Merck’s decision to divest is aligned with the company’s strategy to focus on its pipeline of innovative medicines.
The same day, Fresenius Kabi announced that it acquired Akorn Inc. (NASDAQ: AKRX) for $5.1 billion, or $34.00 per share plus the assumption of approximately $450 million of debt. The price produces multiples of 4.5x revenue and 11.1x EBITDA.
Akorn is a specialty generic pharmaceutical company that develops, manufactures and markets multi-source and branded pharmaceuticals, including ophthalmic, injectable and niche sterile and non-sterile pharmaceuticals.
The deal provides Fresenius Kabi with expertise in development, manufacturing and marketing of alternate dosage forms, as well as access to new customer segments like retail, ophthalmology and veterinary practices. Akorn’s pipeline includes 85 ANDAs (abbreviated new drug applications) filed and pending with the FDA, and more in development. That’s a lot of runway.