Moody's affirmed Amneal Pharmaceuticals LLC's ratings, including its B1 corporate family rating and B1-PD probability of default rating, following its decision to merge with Impax Laboratories Inc.
The outlook is stable.
The corporate family rating reflects the company's moderate size and scale by revenue in the highly competitive generic pharmaceutical industry. The rating is also constrained by Amneal's concentration in the U.S., and by the volatility and pricing pressure in the generic drug industry.
Moody's said the deal will significantly improve Amneal's size and scale, with net revenues exceeding $1.8 billion, and materially diversifying Amneal's stand-alone product portfolio.
The stable outlook reflects Moody's expectation from moderating leverage and a good earnings growth outlook, offset by integration risk and a challenging pricing environment over the next 12 to 18 months.
On the same day, Moody's placed Impax Laboratories Inc.'s B2 corporate family rating and B2-PD probability of default rating under review for upgrade.
The corporate family rating reflects Impax's high financial leverage. The ratings are also constrained by Impax's modest size and scale in the generic drug industry, which is characterized by intense competition and pricing pressure from its customers.
Moody's said the ratings are also constrained by Impax's geographic concentration, as almost all revenues are generated in the U.S.
The ratings are supported by relatively good product diversity, a growing branded business and good projected cash flow, said Moody's.