Sterile injectables growth tempts Pfizer into $360m InnoPharma acquisition

Pfizer has increased its position in the $7 billion-plus market for sterile injectable drugs with a $360 million agreement to buy New Jersey-based InnoPharma.

The US pharma giant wants a bigger slice of the market for sterile injectable drugs – generally used in hospitals to treat conditions such as cancer and pain – which has been plagued by serious shortages in recent years.

Pfizer’s agreement to buy InnoPharma includes an upfront fee of $225 million and another $135 million in the offing if development and commercial milestones are reached, with the deal expected to close in the third quarter.

In return, the multinational gains 10 marketed products, plus a sizeable pipeline with 19 drugs filed for approval in the US and another 30 injectable and ophthalmic drugs in development.

The deal is not in the same league as Pfizer’s thwarted $120 billion takeover attempt on AstraZeneca earlier this year, but gives the US drugmaker a prominent position in a sector that is ripe for growth, given the pent-up demand in the marketplace for medicines that have been in short supply.

An IMS examination of the shortages afflicting the US market last year found that more than 80 per cent of the drugs involved were sterile injectable generics. The situation has arisen in part because big pharma companies sold off legacy products to a small number of generics producers after patent expiry and also because some of those producers have fallen foul of manufacturing quality regulations and have been forced to suspend production.

Sensing an opportunity, in the last couple of years drugmakers have been piling back into the sterile injectable space.

Mylan took a big leap forward in the category after buying Strides Arcolab’s Agila unit last year for $1.6 billion, while Hikma recently snapped up Boehringer Ingelheim’s Bedford Laboratories unit – despite ongoing quality compliance issues – for $300 million.

Since the start of 2014 there has been a string of other injectables deals from the likes of Par Pharmaceuticals, which bought JHP Pharma for a little under $500 million, as well as Lupin Labs, which is in the process of buying Dutch specialist Nanomi. Meanwhile, there have been persistent rumours of interest by pharma companies – including Pfizer and Teva – in injectables specialist Claris Life Sciences, while Becton Dickinson announced a major push into the sector last year.

Aside from the shortage issues, sterile injectables are attractive because they tend to be quite difficult and expensive to manufacture, which raises the bar for companies wanting to compete in the category.

InnoPharma has capitalised on this by focusing its attention on hard-to-make products, such as pen injectors or depot formulations that require complex manufacturing capabilities or have bio-equivalency challenges, as well as novel formulations.

The company says its pipeline includes niche drugs and molecules with solubility, stability or synthesis complexities that tend to require complex studies to bring to market. Drugs already submitted to the FDA address a market of around $5 billion, with its pipeline adding another $7 billion or more to that tally, it claims.

“Today’s announcement is an important milestone as we continue to look for innovative growth opportunities for our sterile injectables portfolio, which will increase 73 products with this acquisition,” said John Young, group president, Pfizer Global Established Pharma (GEP).

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