Fresenius Kabi acquires Akorn and Merck KGaA's biosimilars business in separate deals

Fresenius Kabi on Monday announced that it reached a deal to purchase US generics drugmaker Akorn for $34 per share, or approximately $4.3 billion, plus the assumption of roughly $450 million in debt. John Ducker, CEO of Fresenius Kabi's US subsidiary, stated "joining our two companies and product portfolios will strengthen and diversify both businesses." He added that Akorn brings "specialised expertise in development, manufacturing and marketing of alternate dosage forms, as well as access to new customer segments like retail, ophthalmology and veterinary practices."

Sources disclosed earlier this month that Fresenius was considering a takeover of Akorn, with Akorn later confirming that it had entered into negotiations about a potential merger with the German company. Meanwhile, sources recently suggested that an agreement between the drugmakers could be reached this week. 

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Fresenius expects the deal, which both boards have already approved, to close by early next year. The drugmaker indicated that the transaction will be accretive to net income and earnings per share in 2018. Fresenius also estimated that the transaction will produce about $100 million in cost and growth synergies on a mid-term, pre-tax basis. 

Separately, Merck KGaA stated that it has agreed to divest its biosimilars business to Fresenius for an upfront payment of 170 million euros ($185 million) plus up to 500 million euros ($543 million) in milestone payments and royalties on future product sales. The transaction is expected to close in the second half of 2017. 

Belén Garijo, CEO of Merck Healthcare, remarked "the divestment of our biosimilars business is a major step towards strategically aligning our R&D resources to our healthcare priorities." She said "the partnership with Fresenius will allow us to exploit our biosimilars portfolio to full potential while granting us a substantial return on prior investments." 

Fresenius indicated that it anticipates investing as much as 1.4 billion euros ($1.5 billion) in clinical trials and other development costs for biosimilars before the unit breaks even in 2022. The first sales are targeted for the end of 2019, with sales expected to reach high triple-digit millions of euros by 2023. The biosimilars business, which is developing a portfolio focused on oncology and inflammatory disorders, is expected to continue to operate at its current locations in Switzerland.

Stephan Sturm, who took over as chief executive at Fresenius last July, suggested that both deals make more sense together than individually. "Akorn brings us additional US market access to small- and mid-sized clinics and retail pharmacies, and that access will be important for our biosimilars," he said. 

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