Irish pharma giant joins deal bonanza

IRISH-based pharmaceutical giant Mallinckrodt joined the merger frenzy yesterday by announcing it will buy drugmaker Questcor Pharmaceuticals for around $5.6bn (£3.37bn).

The US firm, which has headquarters in Dublin, was keen to gain access to Questcor’s multiple sclerosis drug, Acthar Gel, which is forecast to hit sales of $1bn this year and $1.9bn by 2018.

The acquisition is Mallinckrodt’s second in less than two months as it pushes into the lucrative specialty drugs market, which focuses on complex and chronic diseases. The company, which had $2.2bn revenue in 2013, also bought Cadence Pharmaceuticals for $1.3bn in February.

Mallinckrodt’s shareholders took a dim view of the deal, pushing the company’s shares down 2.51 per cent to 60.95 on the New York Stock Exchange yesterday. Meanwhile Questcor’s soared 18.73 per cent to $80.58 on the Nasdaq.

The company’s shareholders will receive $30 in cash and 0.897 Mallinckrodt shares for each share held, for a total value of about $86.10 per Questcor share, the companies stated yesterday.

Questcor has been facing federal probes into its marketing practices related to Acthar and multiple accusations from short-seller Citron Research.

Acthar is approved by the US Food and Drug Administration for 19 conditions, many of which are associated with autoimmune and inflammatory diseases, including multiple sclerosis and infantile spasms. Almost all of Questcor’s revenue comes from the drug, which had annual sales of about $760m in 2013, an increase of about 50 per cent from 2012. The company acquired the drug from Aventis for $100,000 in 2001.

The injectable drug, which is a formulation of pituitary hormones extracted from pigs, is priced at about $30,000 per vial.

Mallinckrodt will fund the deal through cash on hand and debt financing from Barclays, which also advised the firm. The deal should complete by the third quarter.

Wachtell, Lipton, Rosen & Katz and Arthur Cox were Mallinckrodt’s legal advisers in Ireland.

Centerview Partners was Questcor’s financial adviser, and Latham & Watkins and Matheson were its legal advisers in Ireland.