OSAKA -- Sawai Pharmaceutical will buy the generics business of U.S. drugmaker Upsher-Smith Laboratories for $1.05 billion, the Japanese company said Thursday, eager to make up for lost time after its first push into the American market stalled.
The Osaka-based drugmaker plans to complete the purchase by the end of June, making Upsher-Smith's generics business a wholly owned subsidiary. Sawai had planned to start selling generics in the U.S. in 2017, but the effective loss of a patent infringement lawsuit threw a wrench into those plans.
Sawai's biggest task had been "building a foundation in the U.S. for responding to authorities and handling production and sales," President Mitsuo Sawai told reporters. The company chose Upsher-Smith "because of its nearly 100-year history, as well as its high name recognition in the U.S. and marketing capability," he said.
The acquisition follows the $736 million purchase of Sagent Pharmaceuticals by Nichi-Iko Pharmaceutical, Sawai's biggest domestic peer, as Japanese generics makers move into the American market. Towa Pharmaceutical also plans to sell medicines in the U.S. with its easy-swallow technology beginning in fiscal 2018.
Sawai's sales totaled roughly 123 billion yen ($1.12 billion) in fiscal 2015. Upsher-Smith makes over $400 million in sales. The U.S. company, founded in 1919, sells a range of about 30 generics products, mainly oral medicines, chiefly in the U.S. Its earnings have been sluggish in recent years.
Driving Sawai's hefty bid for a relatively low-performing company was a rush to enter the U.S. market after its patent lawsuit, especially with rival Nichi-Iko pulling ahead there and Towa catching up.
However, big pharma companies from the likes of India and Israel that make generics and raw materials in emerging countries already throwing their weight around in the U.S. market. For Sawai to establish a large presence, the biggest challenge involves showing investors it can turn enough profit to cover the vast sums the company will spend.