LONDON (Reuters) - BTG, the healthcare group best known for treating rattlesnake bites and varicose veins, is expanding into lung care by buying a Californian firm that has developed a device to prop open airways.
The British company said on Thursday it would pay an initial $230 million and up to $245 million in performance-related future milestone payments to acquire privately-owned PneumRx.
The U.S. firm’s flagship product is the RePneu Coil for advanced emphysema, which tethers small airways open to prevent their collapse.
BTG said the business had potential annual sales of more than $250 million and was expected to boost earnings from the fourth year onwards. The purchase will be funded in part by a 150-million-pound ($235 million) share placing.
The RePneu Coil is already approved and on the market in Europe. It is still awaiting a green light in the United States, which BTG said it hoped to get by the end of 2016.
The acquisition underscores the growth ambitions of BTG, which has emerged over the years from the former state-owned British Technology Group as a company focused on specialty pharmaceuticals and interventional medicine.
Chief Executive Louise Makin said the addition of PneumRx would boost growth prospects significantly, with the interventional medicine business now expected to generate annual sales of more than $1.25 billion by the beginning of the next decade.
Currently, BTG’s interventional medicine business has sales of $150 million, which will rise to $175 million after the PneumRx deal closes early next year.
Makin said BTG did not need to make further acquisitions but the company was on the look-out for similar opportunities in other fast-growing areas.
“If there was something that would fit either in specialty pharma or an area of interventional medicine, then we would go through the same thought process,” she said in an interview. “But our strategy does not require us to do more M&A.”
Adding PneumRx will see BTG entering a third area of interventional medicine - pulmonology - in addition to oncology and vascular medicine.
BTG’s interventional cancer business consists of high-tech beads that release medicine or radiation to fight tumors, while its vascular unit includes Varithena, a recently launched foam that is injected into blood vessels to treat varicose veins.
Its specialty pharmaceuticals operation is famous for CroFab snake antivenom.
Reporting by Ben Hirschler; editing by Jason Neely and Jane Merriman