Sun Pharmaceuticals among bidders for Bayer’s dermatology brands

MUMBAI: Sun Pharmaceuticals is among several pharmaceutical companies and private equity investors that have reportedly expressed preliminary interest in buying the dermatology business of Bayer.
The German pharmaceutical and agri-chemicals giant is working with JP Morgan Chase and the deal is expected to fetch $1.1 billion, a Bloomberg report said. Sun Pharma declined to comment on the development.

Apart from Sun, number one ranked generics giant Teva, Perrigo, Allergan and Spanish pharmaceutical company Almirall in combination with Galderma are also said to be considering a bid for the brands put on the block.

Private equity players KKR, Nordic Capital, Bain Capital, Blackstone and Cinven may also be looking at buying the same assets, Bloomberg reported citing unnamed sources.

The discussions for Bayer’s dermatology assets is at an early stage and the initial offers are expected by the end of this month. Last week, Bayer announced it will acquire global seeds specialist Monsanto in a $66 billion deal, culminating several rounds of intense discussions that had started in March.

Among the brands in Bayer’s dermatology stable are Advantan and Desonate for use in eczema, Bepanthen to treat skin irritation, and Skinoren for acne.

Considering the current valuations for dermatology brands at 5-6 times of sales, Surajit Pal, analyst at Prabhudas Lilladher, noted the sales of Bayer’s brands could be in the range of $200 to $250 million. Sun has cash reserves of over $2 billion and is primed for buyouts at an aggressive pace, according to an investment banker.

Earlier this year, it bought a set of brands from Novartis in Japan for $293 million.

If Sun Pharma advances into the next stages of the process and clinches Bayer’s portfolio, the products will help accelerate its growth plans in the US. With 2016 global sales at $4.3 billion, Sun Pharma is steadily building a dermatology portfolio as part of its specialty focus in the US.

Sun Pharma’s US dermatology business includes Absorica for treating acne and Levulan, a combination therapy approved for the treatment of non-hyperkeratotic actinic keratosis, or AKs, of the face or scalp.

Sun Pharma has quoted IMS data to claim its dermatology prescription volumes, along with its subsidiaries, ranked third in the US. In May, Sun Pharma announced positive data from its two Phase 3 clinical trials of tildrakizumab for efficacy and safety in patients with moderate to severe plaque psoriasis.

Two months later, it signed a deal with Almirall for development and commercialisation of the drug, in return for an upfront payment of $50 million in addition to milestone payments and royalties based on sales.

The other areas of interest for Sun Pharma in the US are ophthalmic drugs, oncology and controlled substances.