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(Reuters) - Specialty pharmaceutical company Endo Health Solutions Inc said it would buy privately-held Boca Pharmacal for $225 million to boost its generics business, as two of its biggest drugs are set to lose patent protection.
Endo, which makes branded and generic drugs, has been trying to shed non-core assets and boost profit through acquisitions as its top seller, the Lidoderm pain-relieving patch, could face generic competition from September.
Its painkiller, Opana ER, is also vulnerable to competition from cheaper copies after its petition to block copies of the drug was turned down by the U.S. Food and Drug Administration.
Coral Springs, Florida-based Boca is a specialty generics company that focuses on niche areas, including controlled substances, semi-solid drugs and solutions -- areas that Endo said were an 'ideal fit' for its own generic business, Qualitest.
This is the second deal in the U.S. generic drugs sector in as many days. On Tuesday, Akorn Inc said it would buy Hi-Tech Pharmacal Co Inc for $640 million to expand its eye drug portfolio.
Big generic drugmakers are consolidating aggressively to gain scale and lower costs as a wave of copycat drugs is set to hit the market as top selling drugs globally lose their patent protection.
Smaller generic players, who cannot compete with the giants on scale, are trying to find specialized niches that can help them command better prices.
Boca, which works on hard-to-find generics, and Hi-Tech, which specializes in difficult-to-manufacture liquid and semi-solid drug forms, offer just such a price advantage.
Endo expects the deal to immediately add to its adjusted earnings and will use cash in hand to finance the deal.
Boca's earnings before income tax, depreciation and amortization in 2013 is expected to be about $50 million.
The deal is expected to close this year, pending regulatory requirements.
Shares of the company rose 28 cents to $39.46 in early trade Wednesday on the Nasdaq.
Reporting by Esha Dey in Bangalore; Editing by Joyjeet Das and Savio D'Souza