Strides Arcolabs' injectable-drugs unit, Agila Specialties Private Limited is up for sale and 'serious bidders' for the asset are Novartis and Pfizer along with U.S buyout fund KKR, ET stated.
Strides is expecting to receive anywhere between $1.6-2 Bn for the unit - more than twice its market value.
Strides provides Pfizer with generic versions of off-patent drugs through a partnership announced in 2010.
Swiss drug-maker Roche may also consider to bid for the unit, ET's sources add.
Agila Specialties' revenue account for close to half of Strides' earnings.
Started in 1990 by Kumar and K.R. Ravishankar, Strides began manufacturing injectable drugs five years later and entered the U.S. market for sterile products in 2004.
Similar acquisitions in the space: In May 2009, Novartis AG paid about 4.7 times sales for Unterach - Austria-based Ebewe Pharma's injectable drug unit in a $1.2 Bn purchase.
Mylan Inc. acquired closely held injectable drug business Bioniche Pharma Holdings Ltd for $550 million in 2010, paying about 4.2 times annual revenue.
American firm Hospira acquired Chennai based Orchid Chemicals' injectable-drugs business for $400 Mn in 2009, paying a value for the unit which was nearly equal to Orchid Chemical's market capitalization at that time.
Strides Arcolab recently witnessed some deal activity with Proparco investing $12.5 Mn Strides' African arm, the company acquiring sterile formulations facility from Star Drugs & Research Labs Ltd. for R125 Cr and it selling 94% stake in subsidiary – Ascent Pharmahealth to Watson Pharmaceuticals Inc. for an enterprise value of AU $375 Mn earlier in January this year.
The Patent Expiry: Again the reason for foreign companies buying into this space is the patent expiry in U.S during 2011-2012 and a shortage of injectibles drugs.
Also crackdown by the FDA on manufacturing practices at steriles plants contributed to a shortage in U.S hospitals. There are 215 drugs currently in short supply, most of which are injectables, according to a list on the American Society of Health-System Pharmacists website.
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