Avadel Pharmaceuticals, a global emerging biopharmaceutical company, sold its portfolio of sterile injectable drugs to Exela Sterile Medicines LLC for $42 million. The Avadel transaction closed on June 30, 2020. In accordance with the transaction terms, Avadel was paid $14.5 million on the closing date and the remaining $27.5 million will be paid to Avadel over the next 13 months.
Avadel’s Sterile Injectable Drugs
Avadel’s portfolio of sterile injectable drugs that it sold to Exela included three commercial products, Vazculep, Bloxiverz, and Akovaz. Vazculep and Akovaz are both used in the treatment of hypotension, or low blood pressure. Bloxiverz is used in the treatment of a muscle disease called myasthenia that causes muscle weakness and rapid fatigue. A fourth product, Nouress, is a cysteine hydrochloride injection that treats neonatal patients requiring total parental nutrition. Nouress received FDA approval in December 2019 and is being prepared for eventual commercial launch. By divesting its sterile injectable drugs portfolio, Avadel Pharmaceuticals can now focus more closely on its products to treat excessive daytime sleepiness.
Sterile Injectable Drugs Market Expected to Expand
According to many research estimates, the sterile injectable drugs market is expected to expand significantly in the future. Key drivers propelling the growth of the sterile injectables market include rising chronic disease rates and the shift to larger molecule drugs to treat diseases. In particular, an uptick in cancer and diabetes worldwide is likely to fuel demand. One research report projects an 11.25% compound annual growth rate (CAGR) of this pharmaceutical segment between 2018 and 2024.
The acquiror, Exela Sterile Medicines LLC, is a division of Exela Pharma Sciences. Exela Pharma was founded in 2005 by Phanesh Koneru. It raised its Series A financing round in 2008 led by Presidio Partners, a San Francisco venture capital firm. Exela’s manufacturing facilities are stationed in North Carolina where the company is headquartered. It also has some research and development operations in Hyderabad, India, a city that has emerged as an Indian hub for biotechnology.
The newly acquired sterile injectable drugs portfolio from Avadel Pharmaceuticals complements Exela’s existing products and enables it to gain a foothold in this growing segment of the industry. Exela Pharma currently has a lineup of 32 generic and proprietary products marketed in the U.S. and Canada.
Market Increasing in Value
The sterile injectable drugs market is projected to be valued at approximately $780 billion by 2024. Due to this fact, both pharmaceutical startups and large industry players alike are aiming to strategically position themselves with products that will meet future demand.
Pfizer, one of the world’s largest pharmaceutical companies, has among the broadest portfolio of sterile injectable drugs in the United States. Pfizer generates over $50 billion in revenues each year and has approximately 88,000 employees, giving it a scaling advantage over less established pharma companies competing in the space. Pfizer’s $15 billion acquisition of the medical device company Hospira in 2015 helped it attain a leading position in the generic sterile injectables market. Now a Pfizer subsidiary, Hospira was the world’s largest producer of generic injectable pharmaceuticals prior to Pfizer’s acquisition. Hospira is known for producing oncology injectables, surgical injectable products, and infusion therapies. However, in 2019 Pfizer encountered difficulties at its Kansas manufacturing facility that supplies much of its injectable opioids and critical hospital injectable products, resulting in major recalls.
Hikma Pharmaceuticals is another prominent player in the segment. The company partnered with Civica Rx, a nonprofit generic drug company that is backed by a number of well-known hospitals in order to increase generic drug access, to supply 14 sterile injectables in 2019. Hikma Pharmaceuticals is a prominent London-based industry player with revenues exceeding $2 billion per year. Hikma also acquired assets of the U.S. generic injectables business of Bedford Laboratories in 2014 in order to expand its offerings.
FDA Approval Complicated
Although manufacturing generic sterile injectable drugs is highly lucrative if executed successfully, mishaps can result in FDA recalls such as the ones Fresenius was subject to for inadequate labeling and contamination issues. Heritage Pharmaceuticals, an industry competitor headquartered in New Jersey, likewise had a nationwide recall of injectables that purportedly caused sterility failures. The reality is that the manufacturing process involves a lot of complexity.
The FDA drug approval process takes time and understanding to navigate for pharmaceutical companies seeking to get sterile injectables on the market. There are generally two approval pathways to decide between—whether to submit an ANDA or a 505(b)(2) marketing application for a drug product. An Abbreviated New Drug Application (ANDA) can be submitted to get market approval for a generic drug. In other words, an ANDA is used when the drug is not novel, but rather a duplicate of an existing drug. Generic ANDA approvals are relatively common compared with approvals under the 505(b)(2) pathway. Under Section 505(b)(2) of the Federal Food, Drug, and Cosmetic (FD&C) Act, a 505(b)(2) new drug application (NDA) should rely on certain data from an already-approved drug.