Mylan Acquires Bioniche Pharma – Analyst Blog

Mylan Inc. (MYL) recently announced the completion of the acquisition of privately held Bioniche Pharma Holdings Ltd for $550 million in cash. The company added that the acquisition, which was announced in mid-July, was completed earlier than expected.

 

The deal gives Mylan a direct entry into the North American injectable drugs market, and should add to the company’s profits in the first year itself, without accounting for operational or other synergies.

 

Ireland-based Bioniche Pharma is a global manufacturer of injectable pharmaceutical products, which include treatments for analgesics/anesthetics, orthopedics, oncology and urology. While Bioniche Pharma has more that 30 products in the market, its pipeline consists of 15 Abbreviated New Drug Applications pending approval at the US Food and Drug Administration (FDA), along with 25 products in various stages of development. These products will help drive top- and bottom-line growth. For the 12 months ended May 31, 2010, Bioniche Pharma posted net revenue of about $130 million.

 

Mylan combined Bioniche Pharma with its own unit dose business, UDL Laboratories, to form a new hospital or institutional business wing called Mylan Institutional, which will be a part of the company’s North American generics segment.

 

Mylan Institutional will focus on hospital and institutional markets, where the company will offer its products to group purchasing organizations, wholesalers, hospitals, surgical and radiology services, home infusion and retail areas.

 

We currently have a Neutral recommendation on Mylan, which is supported by a Zacks #3 Rank (short-term Hold rating). The company holds immense potential in the generics market, as many blockbuster drugs are slated to lose patent exclusivity in the forthcoming years. However, we remain concerned about the Mylan’s high debt burden and pricing pressure and currency fluctuations in Europe.