Aurobindo Pharma, Novartis call off $1 billion deal with Sandoz

Deal mutually terminated as approval from U.S. FTC not obtained within anticipated timelines; Under the September 2018 pact, Aurobindo was to buy U.S. generic oral solids, dermatology businesses from Sandoz Inc.

Aurobindo Pharma and Novartis have called off their nearly $1 billion deal pertaining to U.S. generic oral solids and dermatology businesses of Sandoz.

“This decision was taken as approval from the U.S. Federal Trade Commission for the transaction was not obtained within anticipated timelines,” Aurobindo Pharma and Novartis said in separate statements on Thursday.

Also read | USFDA rescinds letter to Aurobindo Pharma unit

As part of the proposed transaction, for which a definitive agreement was announced in September 2018, Aurobindo was to acquire commercial operations and three manufacturing facilities in the U.S. from Sandoz Inc., a Novartis division. The Hyderabad-headquartered drugmaker had proposed to undertake the transaction through its wholly owned subsidiary, Aurobindo Pharma USA Inc.

In its statement on Thursday, Aurobindo Pharma said it was announcing the mutual agreement with Sandoz Inc to terminate the pact to buy the Sandoz U.S. generic oral solids and dermatology businesses.

While announcing the termination of the pact, Novartis said Sandoz will continue to operate its oral solids and dermatology business as part of the Sandoz U.S. business.

Also read | Aurobindo Pharma unit under USFDA scanner

Novartis had agreed to sell selected portions of its Sandoz U.S. portfolio, specifically the Sandoz U.S. dermatology business and generic U.S. oral solids portfolio, to Aurobindo Pharma USA Inc., for $900 million in cash plus $100 million of potential earn-outs.

The Sandoz U.S. portfolios to be sold to Aurobindo included around 300 products as well as additional development projects. The proposed sale included the Sandoz U.S. generic and branded dermatology businesses as well as its dermatology development center. As part of the transaction, Aurobindo was to acquire the manufacturing facilities in Wilson, North Carolina, as well as Hicksville and Melville, New York. The business had net sales of $0.6 billion in H1, 2018, Novartis had said.

About 750 employees in Hicksville, Melville, Wilson and Princeton, New Jersey, as well as the field representatives for the PharmaDerm branded dermatology business, were also to be transferred to Aurobindo upon closing of the deal, which was expected by 2019.

Aurobindo Pharma managing director N. Govindarajan had said the transaction would position Aurobindo as the second largest dermatology player and the second largest generics company in the U.S. by prescriptions.

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