Sector News

Horizon Pharma weighs sale of primary care unit

September 18, 2017
Life sciences

Specialty drugmaker Horizon Pharma PLC (HZNP.O) is working with investment bank Morgan Stanley to review strategic options for its primary care drugs business, including a potential sale of the unit, people familiar with the matter said on Friday.

Dublin-based Horizon is in talks with a number of parties interested in acquiring the asset, expected to generate annual revenue of $350 million in sales in 2017, according to the people, who asked not to be named because the discussions are private. They added that the talks are in early stages and may not result in a sale.

Horizon declined to comment. Morgan Stanley did not respond to a request for comment.

The move would complete Horizon’s years-long transition away from reliance on drugs prescribed by primary care doctors, including arthritis drug Duexis, and toward drugs treating rare diseases, which are often better insulated from pricing pressure.

Horizon has invested heavily in building a franchise to treat rare diseases in recent years. It has acquired companies such as Raptor Pharmaceuticals, which treats ailments including a rare metabolic disorder, and Crealta, which treats chronic gout.

Meanwhile, Horizon’s legacy primary care faced challenges from efforts by healthcare providers to cut costs and improve quality of care, which has put pressure on drug prices.

Horizon has highlighted the unit’s value as a source of steady cash that can finance other deals in the rare diseases space.

“As we see other opportunities arise for this business, if there is a transaction that makes sense, then we will pursue it,” said Robert Carey, Horizon’s chief business officer on a May earnings call.

The specialty pharmaceutical sector has struggled in recent years, ever since criticism during the election season of high drug prices caused the stock prices of these companies to tumble.

A number of drugmakers have responded to the pricing pressure by exploring asset sales as a way to pay off debt or shed underperforming units.

Reuters previously reported that Mallinckrodt PLC, a specialty drugmaker, was exploring a sale of its generic drug business, which has faced declining revenues in recent quarters.

Israeli drugmaker Teva Pharmaceuticals recently agreed to sell to sell contraceptive brand Paragard for about $1.1 billion to a unit of Cooper Cos.

By Carl O’Donnell

Source: Reuters

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