Photographer: Stefano Buonamici/Bloomberg

CVC to Explore Options for $4 Billion Drugmaker Alvogen

  • Shanghai Pharma holds on-and-off talks on potential purchase
  • Discussions center on generic pharma company’s U.S. operations

Alvogen’s private equity owners including CVC Capital Partners are exploring options for the generic pharmaceutical company, which could be valued at about $4 billion, according to people familiar with the matter.

The controlling shareholders of the drugmaker have held on-and-off talks with Shanghai Pharmaceuticals Holding Co. focusing on a sale of Alvogen’s U.S. business, the people said. Alvogen would keep its operations in Asia as well as central and eastern Europe, one of the people said, asking not to be identified because the information is private.

While they are not running a formal auction process, Alvogen’s owners may look to hold discussions with other international buyers, the people said. Deliberations are at an early stage, and there’s no certainty they will lead to a transaction, according to the people. 

A consortium including CVC and Singapore state investment company Temasek Holdings Pte bought a controlling stake in Alvogen in 2015 for about $2 billion, people with knowledge of the matter said at the time. Representatives for CVC and Shanghai Pharma declined to comment. Temasek said in an emailed statement it doesn’t comment on rumors or speculation.

Alvogen is not in discussions with Shanghai Pharma in regards to a possible divestment of its U.S. business, a spokesman for the company said in an emailed statement. The “focus is to further strengthen our global business through organic growth and strategic acquisitions. In the U.S. specifically, we see several opportunities to further expand our business through strategic partnerships and acquisitions,” the company said.

Shanghai Pharma has stepped up its hunt for investments after missing out on the purchase of German generic drugmaker Stada Arzneimittel AG. The company is currently bidding for a stake in Arbor Pharmaceuticals LLC as well as Cardinal Health Inc.’s Chinese distribution business, people familiar with the matter have said.

Manufacturing Facilities

“We do expect Chinese leaders across the health-care sector to continue to push for internationalization of their business footprint,” Franck Le Deu, a senior partner at consultancy McKinsey & Co., said by email. “It is about diversification, access to more profitable markets.”

Any deal would add to the $236 billion of health-care acquisitions announced globally this year, according to data compiled by Bloomberg. The biggest market for Alvogen is the U.S., where it sells generic pharmaceuticals and provides third-party services such as contract manufacturing and clinical research. It operates a manufacturing facility in Norwich, New York under the Norwich Pharmaceuticals brand. 

Alvogen has 350 marketed products spanning a range of therapeutic areas including oncology, cardiology, respiratory and neurology, according to its website. It develops, manufactures and sells generic drugs, branded medicines, biosimilar products and over-the-counter products like cosmetics and food supplements.

The company also has a plant in Romania and a packaging center in Serbia. It has made three acquisitions since 2012 in Taiwan, where it operates under the Lotus Pharmaceuticals brand, and South Korea combined. Part of its Asian operations are listed as Seoul-traded Alvogen Korea Co., which has a market value of about $285 million.

— With assistance by Hui Li

    Before it's here, it's on the Bloomberg Terminal.