Cephalon to acquire France's Group Lafon in $450 million cash deal

US biopharmaceutical company Cephalon has signed an agreement to acquireFrance's Group Lafon for $450 million in cash. The deal is expected to close by the end of the year and the West Chester, Pennsylvania-based group anticipates taking a one-time charge in the fourth quarter ending December 31, for the cost of acquired in-process R&D associated with the purchase. Lafon will operate as a wholly-owned subsidiary of Cephalon.

Cephalon's primary motive for doing the deal is that it will control worldwide rights to the company's flagship product, the narcolepsy treatment Provigil (modafinil). Lafon produces the active ingredient for the drug at its facilities in Mitry-Mory and granted US licensing rights for Provigil to Cephalon in 1993.

Sales of the drug reached $53.7 million in the third quarter of 2001, and peak revenues are expected to be in the region of $500 million. As a result of the acquisition of Lafon, Cephalon's gross margins for Provigil will improve as it will no longer have to pay manufacturing fees or royalty payments connected with the drug.