Leading Canadian drug company Valeant Pharmaceuticals has finalized a $2.6 billion deal to take over dermatology product maker Medicis Pharmaceutical Corp, reviving a buying spree that has been stagnant since a failed bid for biopharmaceutical company Cephalon Inc last year.
In recent months, the specialty pharmaceuticals company has been concentrating on building up its dermatology portfolio in North America, particularly in the United States. The acquisition of Medicis will add Botox rival Dysport to Valeant’s skin care lineup as well a range of other skin treatments, including the acne drug Solodyn.
Valeant, which has a market value of around $15.6 billion, already owns the well-known cold sore treatment Zovirax, and the CeraVe cleanser and moisturizer brand. Its skin care business in the US accounted for 27% of its revenue for the fiscal quarter ending in June – an 18% increase on the same period last year.
CEO J. Michael Pearson says once the Medicis deal is finalized, it will make up almost 50% of the company’s total revenue. “The acquisition of Medicis represents a significant next step in our journey to become the leader in dermatology by strengthening Valeant’s presence in acne, actinic keratosis, aesthetic injectables and anti-virals,” he added.
Speaking to Reuters news agency, Pearson said: "Dermatology is clearly our most important business. We'll work on growing it. We are quite excited about the future of the market in the United States."
Buying Spree Renewed
The takeover of Medicis is Valeant’s biggest acquisition since its failed Cephalon bid, which had been valued at $5.7 billion. The company was outbid by generics powerhouse Teva, which offered over $6 billion for the merger.
Scheduled to be finalized by summer of next year, Valeant expects the Medicis deal to provide an instant $1.7 billion-boost to revenue in the US across the skin care and aesthetics segments.
The largest publicly listed drug manufacturer in Canada, Valeant launched an aggressive takeover strategy in 2010, following its merger with Biovail Corp. On the success of the Medicis deal, Valeant intends to continue its interrupted acquisition spree, with Pearson hinting at an expansion into Southeast Asia in the distant future.
"If we can find the right opportunity at the right price, we will continue to be very interested in growing in that part of the world," said Pearson.
Key Statistics – Dermatology Industry
- In 2010, the total market value for diagnostic dermatology devices was estimated at $175 million. It is forecast to grow at an annual compound rate of over 7% for the five-year period from 2010 to 2015. (source: Markets and Markets)
- The United States dermatologist industry has low concentration levels, with the largest four companies estimated to make up under 2% of total industry revenue. (source: IbisWorld)
- Dermatologists in the United States account for a total combined revenue of around $10 billion per year. (source: IbisWorld)