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Jubilant acquires Canada base Draxis for US $253 mn

Our Bureau, MumbaiThursday, May 29, 2008, 08:00 Hrs  [IST]

Jubilant Organosys Ltd., (Jubilant) an integrated pharmaceutical industry player and India's largest custom research and manufacturing services, has acquired Canada based Draxis Speciality Pharmaceuticals Inc. (Draxis). Draxis is a debt free company and Jubilant is financing US $253 million transaction using a combination of proceeds from a previous FCCB issue and debt amounting to US $160 million. Given the attractiveness of the business model and the opportunities available in radiopharmaceuticals the transaction is likely to have a very attractive payback. Commenting on the completion of the acquisition, Shyam S Bhartia, chairman and managing director and Hari S Bhartia, co-chairman and managing director of Jubilant Organosys Ltd. said, "We are extremely pleased with the way the Draxis transaction has been completed. Draxis has a robust and exciting product pipeline -such as Sestamibi, where the scope for value accretion will be very high. CMO business of Draxis is expected to provide a fillip to our sterile products portfolio -this is a high-growth and high margin operation where the combined entity with Hollister will be amongst top five CMOs in North America. The supply partnerships with J&J in non-sterile products will ensure substantial business growth from 2009". Draxis offers products in three categories: sterile products, non-sterile products and radiopharmaceuticals. Sterile products include liquid and freeze-dried (lyophilized) injectables plus sterile ointments and creams. Non-sterile products are produced as solid oral and semi-solid dosage forms. Radiopharmaceuticals are used for both therapeutic and diagnostic molecular imaging applications. Radiopharmaceuticals are developed, produced, and sold by the Draxis through its Draximage division and contract manufacturing services are provided through Draxis Pharma for sterile and non-sterile products. Draxis operates a US FDA approved manufacturing facility and employs approximately 500 staff in its Montreal facility at Canada. It is recognized globally for its quality and execution capabilities, strong regulatory track record and has an established customer base comprising large innovator and specialty pharmaceutical companies. Radiopharmaceutical is a niche, high entry barrier business. Draximage markets radioactive products with the radioactive isotope already incorporated, and non-radioactive products, which are sold in lyophilized form. It primarily supplies to radiopharmacies -that provide therapeutic and diagnostic solutions to end customers comprising hospitals, imaging centres and cardiology/oncology clinics. The division has a strong research set-up and has created a robust pipeline of products. Jubilant will thus benefit from the significant product development and marketing capability of this division. Draximage Sestamibi -a generic version of Cardiolite, is used in cardiac stress testing to evaluate blood flow to the heart. The market potential of products of such kind is immense and estimated at US $631 million and continues to grow given the prevalence of lifestyle ailments. Draxis has submitted applications seeking marketing authorizations for Sestamibi with the US FDA and with European and Canadian regulatory authorities.

 
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