Boston, MA 02/12/2014 (wallstreetpr) – Cadence Pharmaceuticals Inc (NASDAQ:CADX) is reportedly to be overtaken by Mallinckrodt Plc (NYSE:MNK) in a cash deal of around $1.3 billion. Mallinckrodt is offering Cadence 26% above the San Diego based company’s shares’ closing price in New York on Feb 11 which means $14 per share.
Expand specialty pharmaceuticals business
Mallinckrodt is attempting to increase its presence in hospitals and this deal will associate one of the pain treatments offered in hospitals with the company’s name. Chief Executive officer Mark Trudeau said he wants his company to grow in specialty pharmaceuticals. What draws his interest in the company is Cadence Pharmaceuticals Inc (NASDAQ:CADX)’s pain treatment drug called Ofirmev which is an intravenous form of acetaminophen for pain treatment. The drug has recorded sales of as much as $110.5 million last year and Trudeau expects it still has the capacity to double this figure.
Mallinckrodt Plc (NYSE:MNK) which specializes in pain treatment is expecting to expand its specialty pharmaceuticals business with this takeover. Ofirmev appears on the formulary, the list of suited medicines in hospitals and as many as 2,350 hospitals in the U.S. prescribe the drug. It has been employed to treat almost 7 million people since it was first launched in the U.S. in 2011.
Sell medical imaging business
Trudeau’s new strategy includes not only increasing investments in specialty pharmaceuticals but also to decrease the company’s focus on medical imaging. In 2013, before the drugmaker was spun off by Covidien Plc, both the two businesses shared 50% of the revenue. But after the spin out, the pharmaceuticals business accounts for 57% while the imaging business, which accounts for only 43% of the revenue, is expected to be sold any time in the future, he said. Ireland’s low tax rates are also a chief reason why the company might consider selling off the business unit. Trudeau considers this to be best in favor of the interest of the company’s shareholders.
