Canadian pharmaceuticals company Valeant Pharmaceuticals International, Inc. (VRX) recently announced that it has completed its acquisition of iNova from Australian private equity firms, Archer Capital and Ironbridge. iNova pharmaceutical group develops and markets prescription and over-the-counter (“OTC”) pharmaceutical products in Australia, New Zealand, Southeast Asia and South Africa. Valeant Pharma had entered into a deal to acquire iNova in November 2011.
Valeant Pharma paid iNova shareholders 625 million Australian dollars as upfront payment. iNova shareholders will also be entitled to receive potential milestone payments of an additional $75 million Australian dollars, depending on pipeline success.
Of late, Valeant Pharma has been on a buying spree. In mid December 2011, Valeant Pharma entered into a deal to acquire California-based pharmaceutical company ISTA Pharmaceuticals Inc. (ISTA) for $327 million. With this acquisition, Valeant Pharma is looking to establish its presence in the ophthalmic field. In December, Valeant Pharma also completed its previously announced deal to acquire Dermik, the dermatology unit of Sanofi (SNY), for a total cash consideration of $422.5 million. The acquisition is expected to fortify Valeant Pharma’s already strong presence in the US dermatology market.
Prior to the Dermik acquisition, Valeant Pharma announced its amalgamation with another Canadian company Afexa Life Sciences Inc. Valeant Pharma paid 0.85 Canadian dollars for each common share of Afexa, hoping the buy will synergize well with Valeant Pharma’s Canadian OTC franchise.
Earlier, in mid-August 2011, Valeant Pharma completed the acquisition of Lithuania-based specialty pharmaceuticals company, Kaunas, which is expected to boost its European branded generic portfolio. This was preceded by the July 2011 deal to acquire the assets of Ortho Dermatologics, a dermatology unit of pharma giant Johnson & Johnson (JNJ), for a cash payment of $345 million in July 2011.
Our Recommendation
We currently have a Neutral long-term recommendation on Valeant Pharma. The stock carries a Zacks #2 Rank (Buy rating) in the short run.
Valeant Pharma, as it stands today, was formed following the merger of Biovail and Valeant in September 2010. We believe the combined Biovail/Valeant entity is a unique company as it has a global reach, a diversified revenue base, a favorable tax structure and limited patent exposure. Moreover, accretive acquisitions add to the company’s investment thesis.
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