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Understanding Akorn’s Focus on Inorganic Growth

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Inorganic growth

Since 2011, Akorn (AKRX) has focused on acquisitions that either expand the company’s core capabilities or increase its geographic market access. Some acquisitions were also transformative and added to the company’s manufacturing capabilities, enabling it to focus on the alternate dosage forms portfolio.

The above diagram lists the various acquisitions completed by Akorn since 2011 and the role they played in the company’s strategy. Akorn has also been involved in developing its ophthalmic solutions segment. Inorganic growth has been a vital part of Akorn’s strategy and has enabled the company to pose tough competition to peers like Teva Pharmaceuticals (TEVA), Perrigo (PRGO), and Pfizer (PFE).

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Product lines

Akorn plans to boost growth across product lines such as human generics, branded over-the-counter, branded prescription (or Rx), and animal health through targeted acquisitions. The company plans to identify targets that will strengthen its presence in the alternate dosage form market as well as in the ophthalmology market.

Akorn also expects to adopt an inorganic growth strategy for gaining access to well-performing legacy brands as well as for penetrating the over-the-counter health and wellness segment.

Financial performance

The success of Akorn’s organic and inorganic growth strategy is highlighted by the company’s financial performance. The company reported a compounded average growth rate of about 76% in revenues, from $318 million in 2013 to $985 million in 2015. In 2016, Akorn expects to earn revenues in the range of $1.06 billion–$1.08 billion.

If Akorn manages to exceed its revenue guidance, it could have a positive impact on the share prices of the SPDR S&P MIDCAP 400 ETF (MDY). Akorn makes up about 0.17% of MDY’s total portfolio holdings.

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