Watson completes Arrow deal, adding generic Lipitor to US portfolio

By Gareth Macdonald

- Last updated on GMT

Related tags: Pharmacology, Food and drug administration

Watson Pharmaceuticals gained US rights to market a generic version of Lipitor (atorvastatin) in 2011 with the acquisition of non-branded drugmaker Arrow Group late last week.

The takeover, which was tabled in June​, was cleared on December 2 after Watson agreed to conditions laid down by the Federal Trade Commission (FTC) under its competition rules.

To complete the deal Watson was required to sell abbreviated new drug applications (ANDAs) for non-branded versions of Dostinex and Marinol, the latter owned by Arrow’s subsidiary Cobalt Pharmaceuticals, to US generics firm Impax Laboratories.

Additionally, Arrow's subsidiary Resolution Chemicals, which will supply Impax with the active pharmaceutical ingredient (API) for generic Marinol, has been sold to its management team as part of the Watson deal.

While US rights to generic Lipitor, currently the world's best selling pharmaceutical, were a key motivation for the deal, they were not the only factor. Arrow also has 99 other drugs as well as a global manufacturing and distribution network that will undoubtedly be an asset.

In wider terms, Watson’s efforts to boost its generics business are understandable given that the last few months have seen a number of Big Pharma firms expand in this area to both prepare for the loss of patent protection for key drugs and access emerging markets where non-branded pharmaceuticals tend to dominate.

The need to build to make the most of opportunities was stressed by Watson CEO Paul Bisaro, who said: "The combination of these two highly successful companies with complementary geographies results in a company with strong commercial positions in such established markets​.”

Bisaro added that: “We will continue to have flexibility to be opportunistic in business development initiatives for both our Generics and Brand businesses​," and predicted that: “the acquisition to be accretive to cash earnings per share in 2010​.”

Biogenerics boost

The Arrow deal also provides Watson with a 36 per cent stake UK contract biologics developer Eden Biodesign, which the firm said gives it a “long-term foundation for biosimilars​.”

The skills and capacity required to produce biologics create higher barriers to entry for biogenerics than small molecules, which has seen a number of generic players inks deals to gain the expertise.

And, while Watson has not gained a controlling share in Eden its comments do suggest that it sees biogenerics as a key driver going forward.

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