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Dr Reddy’s offers €27m for Dutch formulation firm OctoPlus

pharmafile | October 23, 2012 | News story | Manufacturing and Production Dr Reddy's, OctoPlus, outsourcing 

India’s Dr Reddy’s Laboratories has signed an agreement to buy Netherlands-based formulation and drug delivery specialist OctoPlus in a €27m deal that would increase its capabilities in outsourcing and injectable drugs.

Dr Reddy’s has made an offer of €0.52 per share for OctoPlus, which it says was a 30% premium over the Dutch firm’s share price at the close on 19 October, and says the boards of both companies are backing the offer.

The Indian firm said it became interested in OctoPlus because of the company’s expertise in hard-to-formulate injectable drugs, which is based on the use of microspheres and liposomes to enhance the stability and bioavailability of active drugs.

It also said it wanted to expand its outsourcing business, and OctoPlus would help that objective as its fee-for-service business is on the rise with revenues up 40 per cent in the past 12 months.

Dr Reddy’s current outsourcing activities are part of its Pharmaceutical Services and Active Ingredients unit, and accounted for around $100m of its $457m revenues in the quarter ending June 2012.

OctoPlus combines a conventional drug delivery technology licensing business with advanced drug formulation and clinical scale manufacturing services, a model that provides protection from competition in the increasingly hard-fought contract manufacturing sector.

A joint statement issued by the two companies notes that the size of offer reflects the fact that one of OctoPlus’ lead projects – Biolex’ Locteron (controlled-release interferon alfa) for hepatitis C – has hit the buffers.

Biolex filed for bankruptcy in September and cancelled an order asking OctoPlus to supply clinical supplies of the drug for phase III testing. Moreover, OctoPlus and Dr Reddy’s note that “over the last few months the value of Locteron has significantly eroded, due to the ongoing emergence of oral hepatitis C treatments”.

Under the terms of the deal OctoPlus would retain its corporate identity and operate as a standalone R&D unit of Dr Reddy’s, specialising in drug formulations and injectables and based in its current Leiden headquarters.

Phil Taylor

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