Hikma Pharmaceuticals buys US-based Custopharm to boost injectables business

The deal is worth up to $425 million

Hikma last year acquired the US generic drugs business of Boehringer Ingelheim and has now sealed another acquisition. AP

Hikma Pharmaceuticals is buying generic sterile injectables company Custopharm as it looks to boost its needle-based treatments business in the US in a deal worth up to $425 million.

Hikma, which was founded in Jordan four decades ago, will buy Custopharm, which has headquarters in California, from Water Street Healthcare Partners in Chicago, it said on Monday.

"With this acquisition, Hikma will have a differentiated US portfolio of close to 130 injectable medicines – a more than fivefold increase over the last decade," said Riad Mishlawi, president of Hikma Injectables.

"Through this broad portfolio and by combining Custopharm’s strong R&D capabilities with our high-quality and extensive manufacturing footprint, we will be in an excellent position to better serve the growing needs of hospitals, doctors and patients."

Hikma Pharmaceuticals – which supplies various generic drugs including anaesthetics, pain medications, sedatives, neuromuscular blocking agents and anti-infectives – recorded a 17 per cent increase in profit for the first half of 2021, as revenue grew driven by higher sales across its three business units of generic, branded and injectable drugs.

The London-listed company will pay an initial cash consideration of $375m on a debt and cash-free basis, with a further $50m payable with the achievement of certain commercial milestones, Hikma said.

Hikma expects Custopharm to generate annual revenue in 2021 of more than $80m and for the acquisition to be accretive to Hikma’s Injectables operating margin, it said.

The Custopharm acquisition is "highly complementary" to Hikma's existing business and adds a "differentiated" growth potential, the company said.

“This acquisition provides Hikma with an attractive opportunity to further strengthen our US injectables business, by adding an attractive and profitable portfolio of marketed products and an exciting pipeline of future opportunities," said Siggi Olafsson, chief executive of Hikma. "Custopharm is an accomplished operator in the US injectables market with a first-class scientific team and a strong regulatory track record."

Hikma's injectables portfolio in the US of 119 products and an incremental contribution from new launches partially offset lower demand for products used in the treatment of Covid-19, when compared with the first half of 2020, it said in August.

Hikma operates in the US, Middle East, North Africa, Europe and employs 8,400 people globally.