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Par Pharma Takes Over Anchen Pharma

Zacks Equity Research

Par Pharmaceutical Companies Inc. (NYSE:PRX - News) recently announced the completion of the acquisition of privately-held Anchen Pharmaceuticals. In August this year, Par Pharma had entered into a definitive agreement to acquire the latter for $410 million in cash. The transaction is expected to be immediately accretive to 2011 earnings.

Anchen Pharma’s portfolio consists of five marketed products, 27 abbreviated new drug applications (ANDAs) filed with the US Food and Drug Application (:FDA), five of which are believed to be first-to-file, and about 26 products in development.

We note that this acquisition will add to Par Pharma’s portfolio, helping boost the company’s revenues, which amounted to $215.4 million in the third quarter of fiscal 2011, 8.1% below the year-ago figure of $234.4 million. Lower royalty income and a slip in the sales of Par Pharma’s generic products primarily led to the decline. (Read our full coverage on the earnings at: EPS, Revenues Decline at Par Pharma).

Par Pharma has been quite active in making acquisitions and entering into deals lately. So far in 2011, the company has announced three deals. In October, Par Pharma acquired the rights to three products from Teva Pharmaceutical Industries Ltd. (NasdaqGS:TEVA - News), following the latter’s acquisition of Cephalon.

Earlier, in May, Par Pharma announced its intention to acquire India-based generic company Edict Pharmaceuticals. Edict Pharmaceuticals has seven ANDAs filed with the FDA and one ANDA filed in the name of a development partner, along with 14 additional products in development. We note that these transactions will add to Par Pharma’s portfolio and help boost the company’s revenues.

We currently have a Neutral recommendation on Par Pharma. The stock carries a Zacks #3 Rank (Hold rating) in the short run. We note that at the end of third quarter 2011 the company had around 32 ANDAs pending approval with the FDA. Thirteen of which are believed to be first-to-file opportunities.

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