Mylan announced today that it will pay $550m to acquire Bioniche, a private-equity owned generics company that specialises in injectable drugs. According to Mylan, Bioniche had turnover of $130m in the 12 months to end May 2010 and we believe that its EBITDA margins are around 30%, implying that Mylan paid an EV/sales (the deal was cash and debt free) of 4.2x and an EV/EBITDA of 14x, which is not totally out of line with recent deals in the sector.
Bioniche makes most of its sales in the US but has manufacturing in Ireland, where it is headquartered. It makes both vials and pre-filled syringes and has roughly 30 different products on the market, spread across a number of therapeutic areas that include analgesics/anaesthetics (close to a quarter of its sales come from a branded version of clonidine licensed from Astellas), oncology, orthopaedics and urology. It also has 15 ANDAs pending approval in the US and a further 25 products in development.
Mylan plans to combine Bioniche with UDL Labs, its unit dose subsidiary, to create Mylan Institutional, which will focus on the US hospital and institution markets. This subsidiary should also eventually provide a platform through which Mylan can market biogenerics.
In our view, this deal makes a lot of sense for Mylan, which has a stated ambition of developing ‘hard to make’ generics but is actually rather weak in many of the more value-added areas of the industry. Bioniche should also complement Qualimed, Mylan’s French injectables business, and ought to give a boost to the company’s efforts to roll out injectables across Europe.