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Actavis-Medicines360 Ink Partnership

ACT MYL

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Actavis, Inc. (ACT - Analyst Report) recently entered into a partnership deal with a non-profit pharmaceutical company, Medicines360. The companies are collaborating to reduce cost as a barrier to accessing women's birth control.

Under the deal, Actavis gained commercial rights in the US and Canada to the LNG20 intrauterine device (IUD) for $50 million. Actavis may end up paying up to $125 million on the achievement of milestones. Moreover, Medicines360 will receive royalties on net sales per year.

LNG20 is currently in phase III development in the US where it could be launched next year provided it gains FDA approval. While Actavis will market the IUD in the US and Canada commercially, Medicines360 will provide the same at a significantly lower price in public sector clinics.

We note that LNG20 was developed by Uteron Pharma, which was acquired by Actavis earlier this year. Medicines360 had acquired commercial rights for LNG20 in the US and some other countries from Uteron. While marketing rights in Western Europe and certain other regions remain with Actavis, Gideon Richter is a partner for certain European countries. LNG20 is currently under review in the EU and could be launched this year.

While Actavis continues to work on driving generic product sales, the company is also working on strengthening its branded product portfolio. Last month, Actavis announced its intention to acquire Warner Chilcott plc which will result in the creation of a leading global specialty pharmaceutical company with combined annual revenues of about $11 billion. The combined company will hold the third position in the US specialty pharmaceutical market with annual revenues of about $3 billion.

Actavis currently carries a Zacks Rank #3 (Hold). Among generic companies, Mylan (MYL - Analyst Report) currently looks well-positioned with a Zacks Rank #2 (Buy). In the broader pharma sector, Santarus, Inc. currently looks attractive with a Zacks Rank #1 (Strong Buy).

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