Leading Japanese generics firm, Sawai Pharmaceutical, has purchased the generic pharmaceuticals business of Upsher-Smith from its parent ACOVA for $1.05 billion.

Minnesota-based Upsher-Smith is a privately held pharmaceutical company, owned by the Evenstad family through their company, ACOVA. Mark Evenstad is the chief executive officer of Upsher-Smith, and his father, Ken Evenstad is the chairman. Upsher-Smith has a diversified product portfolio of over 30 pharmaceutical products, mainly oral solid preparations, and a pipeline of over 30 products.

The deal is expected to close near the end of June 2017. Rusty Field, the current president of Upsher-Smith, will continue leading the company. Upsher-Smith’s non-generic pharmaceuticals businesses will remain with ACOVA.

The acquisition will mark a major expansion of Sawai’s presence in the U.S. market. Moving forward, Sawai plans to build a U.S. business that leverages its intellectual property and combines R&D capabilities with Upsher-Smith’s manufacturing base, strong distribution network, established commercial relationships and respected brand. For Upsher-Smith, the acquisition brings access to Sawai’s state-of-the art manufacturing technology and opportunities to bring its medicines to new markets like Japan.

Upsher-Smith offers a broad array of generic and branded medications, and through its pharmacist heritage, has built long-standing relationships with pharmacies, wholesalers, retailers and healthcare organizations to distribute its products.

“Upsher-Smith has developed and delivered crucial therapies to patients, from infants to the elderly, with a broad array of on-market generic pharmaceuticals. We have also built a pipeline that will enable even more patients to get life-changing therapies over the next several years. After owning and operating Upsher-Smith for the past 47 years, my family and I made the decision to sell the largest part of our company, the generic pharmaceuticals business, to Sawai,” said Mark Evenstad, chief executive officer, Upsher-Smith. “It was extremely important for us to find a buyer that shared Upsher-Smith’s values, was completely committed to its long-term success and was looking for a strong and fully operational U.S. platform for growth. Sawai is a compelling strategic fit and we are delighted that the generics business is poised to benefit from the extensive resources and management focus that Sawai will bring.”

With the aging Japanese population, and the increasing focus on bringing down the cost of medicines, in 2015 the Japanese government set a target of raising the share of generic prescriptions to 80% by fiscal 2020. In August 2016, Sawai announced in its medium-term business plan, “M1 Trust 2018”, focused on providing a stable supply of generics to meet this government goal and maintaining its number one position among manufacturers of generic medicines. As part of this medium-term business plan, Sawai spelled out its intent to target the U.S., the world’s largest pharmaceutical market, for expansion.

“We are delighted to sign this agreement today with ACOVA to acquire Upsher-Smith, which is our first overseas investment. Upsher-Smith, like Sawai, has a long history as a private family-owned generic pharmaceuticals company that is also focused on patient needs, centered on our philosophy of patients first. We look forward to working closely with Rusty and the talented management team to forge a new global chapter in Upsher-Smith’s future together. Most importantly, we are committed to the entire team at Upsher-Smith, and to expanding the opportunities for the U.S. workforce at Upsher-Smith,” said Mitsuo Sawai, president, Sawai Pharamaceutical.

No changes to Upsher-Smith’s operations are currently anticipated, and under the leadership of Rusty Field, the current management team will continue to lead Upsher-Smith from its current headquarters in Minneapolis.