Bora Pharmaceuticals to acquire Upsher-Smith for $210M

Bora Pharmaceutical announced that its board of directors has approved the acquisition of Upsher-Smith Laboratories, a generics manufacturer based in Minnesota, from shareholders, Sawai Group Holdings Co and Sumitomo Corporation of Americas, for a total consideration of up to $210 million.

Upsher-Smith, founded in 1919 and owned by Sawai since 2017, has a diversified portfolio of 48 generic products with manufacturing facilities in Plymouth and Maple Grove, Minn. Upsher-Smith is highly respected in the industry and is recognized as a reliable partner with solid manufacturing capabilities, a robust distribution network and established commercial relationships.

Combined, the two manufacturing facilities in Minnesota are capable of commercializing a broad range of dosage forms including oral solid, powders (both oral and topical), and liquid, as well as packaging. Through this acquisition, Bora not only gains additional capacity to support the CDMO business, but also completes its capabilities to serve customers throughout the value chain, covering the entire U.S .market.

[Read more: Upsher-Smith, NASPA recognize 47 pharmacists with 2022 NASPA Excellence in Innovation Award]

Upsher-Smith’s product portfolio also presents significant opportunities for Bora’s commercial Rx business, TWi, in the United States. Upsher-Smith’s decades-long presence in the U.S. generics market offers deep industry expertise and know-how, as well as a well-recognized and respected name.  

In addition to an immediate revenue stream from a diversified portfolio of generic and branded generic products, Upsher-Smith will also offer TWi enhanced product development and marketing capabilities so that it can continue to broaden its suite of products and grow its U.S. commercial business.

Commenting on the acquisition, Bobby Sheng, chairman and CEO of Bora Group, said, “This is a significant milestone for Bora Group, marking the most critical expansion of Bora’s presence in the U.S. market and significantly enhancing Bora’s position as a global competitor with regard to its CDMO business and commercial Rx business.”

“Upsher-Smith’s competitiveness is a perfect match to Bora’s long-term growth – its newly-expanded, USFDA-approved manufacturing facilities, with a total capacity of 3.5 billion doses, will be Bora’s first local facility in the U.S., establishing a crucial stronghold for our global CDMO business.”

“Upsher-Smith’s platform for specialty generics will strengthen TWi’s advantage in the U.S. commercial sale business with a complementary portfolio and differentiated distribution channels. We are confident, and also committed, to delivering another successful integration for accelerating Bora’s expansion and growth in the market.”

[Read more: Upsher-Smith honored with HDA’s DIANA Award]

The closing of the transaction is subject to customary regulatory approvals. Upon closing, Bora, via its wholly-owned subsidiary in the U.S., will acquire 100% equity interest of Upsher-Smith.

Transaction Highlights:

• This acquisition marks Bora’s inaugural acquisition in the United States, signifying a pivotal expansion of Bora’s presence in the U.S. market and creating substantial opportunities for Bora’s global CDMO business and commercial sale operations
• The acquisition provides Bora with its first local sites dedicated for its U.S.-based and international CDMO customers.
• USL has established an attractive specialty generics business in the United States, introducing a complementary portfolio and a differentiated sales channel to Bora’s commercial Rx business, TWi.
• The synergies realized through the integration of all the resources deployed by Bora will significantly accelerate its growth, propelling Bora to become a leading competitor in the pharma industry, the company said.

Sawai Group Holdings Co. announced in a statement that its board of directors, at a meeting held on Jan. 16, resolved to transfer all shares of Sawai America Holdings, a holding company of its U.S. business, as well as its interests in Sawai America and interests in Upsher-Smith Laboratories, both of which are subsidiaries of SAH, to Bora Pharmaceutical Holdings. At the same time, Sumitomo Corporation of Americas, a co-investor in SAL, will also transfer its interests to Bora.

The transfer of these shares is planned to be executed subject to the approval of the United States antitrust authorities and in accordance with other laws and regulations.

Stifel served as exclusive financial advisor to Sawai, Sumitomo, and Upsher-Smith on this transaction. Debevoise & Plimpton serves as transaction counsel and Katten Muchin Rosenman as antitrust counsel to Sawai, Sumitomo and Upsher-Smith in this transaction.

Sawai provided the following as to the reason for the transfer of these shares:

In 2017, Sawai Group acquired Upsher-Smith with the goal of full-scale entry into the U.S. market, the world’s largest generic drug market. Since this acquisition, we have sought business growth by implementing a variety of measures, including the consolidation/closure of factories, enhancing production capability and increasing the pipeline capacity.

Despite our dedicated efforts, the business environment became increasingly complex as the top three purchasing groups strengthened their buying capabilities and competitors, particularly from India, intensified price competition. Consequently, in the fiscal year ending March 2022, we recorded significant impairments of goodwill and other assets. To address these challenges, we undertook proactive measures such as streamlining back-office operations, implementing cost-cutting initiatives and restructuring our R&D framework and development strategies.

Given these circumstances, Sawai Group discussed various options with its co-investor, Sumitomo Corporation Group. From the discussion, it was recognized that bold product investment strategies and additional investments to effectively utilize Upsher-Smith’s new factory will be needed to stay ahead of its competitors. On the other hand, Sawai Group needs to prioritize the investment of management resources in the Japanese business to solve quality issues and expand demand in Japan. Therefore, Sawai Group decided that the best option would be to sell the shares and interest of the U.S. business to Bora, a globally recognized CDMO with a global commercialization arm who is eager to invest in the U.S. pharma business and effectively utilize Upsher-Smith’s new factory capacity, and concluded an agreement regarding the transfer of these shares.