Image: A bottle of topical Lidocaine spray, marketed in Mexico as Xylocaina Spray. Photo courtesy of Wikipedia.

US-based Endo Health Solutions Inc, a specialty pharmaceutical, has reached an agreement to purchase privately-held Boca Pharmacal for $225m to improve its generics business, as a result of two of its biggest drugs losing patent protection.

Endo, which manufactures brand name and generic drugs, has been trying to discard its “non-core assets and boost profit through acquisitions” particularly because its pain-relieving patch, Lidoderm, could be facing generic competition starting in September.

Its pain reliever Opana ER, is also susceptible to competition from less expensive versions after its petition to stop reproductions of the drug was denied by the US Food and Drug Administration (FDA).

This is the second deal in the US generic drugs sector, the first being Tuesday’s, Akorn Inc’s agreement to buy Hi-Tech Pharmacal Co Inc for $640m in order to expand its eye drug portfolio.

Generic drug producers are consolidating enable lower costs as an upsurge of replica drugs will be reaching the market, while brand name drugs will lose their patent protection globally.

Boca, which handles ‘hard-to-find generics’, and Hi-Tech, which focuses on ‘difficult-to-manufacture liquid and semi-solid drug’ types, provide lower cost price benefits.

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Endo president and CEO Rajiv De Silva said: “The acquisition of Boca Pharmacal is the first of several transactions we plan to execute as we transform Endo into a more focused specialty healthcare company with a lean operating model, able to deliver consistent earnings and revenue growth for our shareholders.

“The acquisition is aligned with our current generics footprint and will meaningfully accelerate the growth of Qualitest in 2014. I believe that the revenue and earnings contribution of this transaction, combined with the unique commercial portfolio and strong pipeline of ANDAs, make this an ideal fit.”

Endo expects the deal with Boca will immediately enhance its adjusted earnings and will use cash to fund the deal.

Image: A bottle of topical Lidocaine spray, marketed in Mexico as Xylocaina Spray. Photo courtesy of Wikipedia.