Intas Pharmaceuticals is offering just under USD 1 billion to acquire UK-based Mallinckrodt's US generics business, below the asking price of at least USD 1.2 billion, people directly aware of the matter said.
Ahmedabad-based Intas, controlled by the Chudgar family, lowered the final valuation on fears of future lawsuits involving Mallinckrodt's opiate-based painkillers, which is facing a crackdown for its addictive potential, they added.
Temasek and ChrysCapital-backed Intas is said to be the only serious bidder left in the fray. If there's no agreement on valuation, Mallinckrodt could pull back the deal and explore other options. "The offer price is in the range of USD 950 million to USD 1 billion. Both Intas and Mallinckrodt are sticking to their respective positions, slowing down the negotiations right now," one of the sources mentioned earlier said.
Another source said Intas was still pursuing the deal though it was unlikely to raise the valuation. Despite legal worries, opioid or medicinal-controlled substances remain an attractive therapeutic segment with less competition and higher profit margins.
Last year, media reports mentioned that Intas had emerged as a strong contender to acquire Mallinckrodt unit in a deal estimated between USD 1.5-2 billion. The other bidders included India's Aurobindo Pharma and consortium of private equity investors.
When contacted, Intas Pharma said it would not comment on speculation, while Mallinckrodt could not be reached for comments immediately.
Concerned with the overuse of prescription painkillers, US president Donald Trump recently declared the opioid crisis a public health emergency. The scourge reportedly has played a role in over 33,000 deaths in 2015, according to the US Centers for Disease Control and Prevention, with death rate rising, estimates show. Mallinckrodt has reportedly paid a fine for its sales of opioid drugs in certain states, and faces other investigations as well.
If the deal happens, this will still be the largest overseas acquisition by Indian pharma industry, marginally topping Lupin's buyout of US-based Gavis Pharma for USD 880 million two years ago. Intas acquired Teva's Actavis units in the UK and Ireland for USD 732 million last August. India's USD 36-billion pharma industry has come under pressure following the central government's move towards generalization of prescribed medicines.
Nearly half of the industry's revenue is still locked up in domestic markets. Intas, which has remained an active acquirer in recent past, had reported a revenue topping USD 1 billion and net profit of USD 160 million last fiscal. Intas is among the country's top 10 pharma companies with a 2.8 percent share of the domestic market. – TOI