Goldman Sachs Group Inc is facing tough time in selling $2.8 billion of debt in the wake of ongoing drug pricing controversy in the pharmaceutical industry.

The Canada-based Concordia Healthcare Corp has decided to buy Amdipharm Mercury, a drug maker, for $1.9 billion. The Canadian company is in the process of financing the purchase of Amdipharm Mercury Ltd.

Goldman Sachs is the underwriter and sees bleak situation for Concordia's debt selling including $1.1bn term loan and $762mn (GBP500mn) loan for marketing to support the takeover. There's also a plan to issue $950mn worth bonds. Banks that finance Concordia are keen to conclude the acquisition next week. 

Concordia, engaged in pharmaceutical products marketing, has been suffering in the stock markets as its stock plunged by over 60 percent since September. According to a filing by the company on 25 September, in case Concordia couldn't mobilize the debt from capital markets, it has to rely on its lenders Goldman Sachs, Credit Suisse Group, Royal Bank of Canada and Jefferies Group. 

The unrealistic rise in drug prices has put pharmaceutical companies under scrutiny. Recent decision of Turing Pharmaceuticals to jack up the price of newly acquired drug Daraprim has further worsened the situation in the pharma sector. Majority of pharma stocks and bonds are reeling under pressure in the financial markets.

Concordia Healthcare in early September announced its intention to acquire Amdipharm Mercury from private equity (PE) firm Cinven for $1.9bn. The acquisition will enable Concordia to have drug portfolio of 200 from the existing 20 and also help in spreading footprint in overseas markets.

If the deal successful, Amdipharm acquisition will be the second buyout for Concordia this year. The Canadian company is planning grow through acquisitions with an objective of competing major rival Valeant Pharmaceuticals International Inc. Amdipharm Mercury has been floated in 2012 from the merger of Mercury Pharma and Amdipharm. 

The acquisition deal including the debt is valued at $3.3bn. In addition to this, the performance-based payment of $220mn is payable in cash during the fourth quarter of 2016. After the acquisition, Cinven will have 19.9 percent stake in Concordia. 

The deal is expected to close in fourth quarter of 2015. The deal cost is expected to be immediately added to the Concordia's adjusted earnings. Goldman Sachs is the financial advisor to Concordia and Sullivan & Cromwell, Fasken Martineau DuMoulin and Simmons & Simmons are the legal advisors.

Mark L Thompson, CEO, Concordia, has terms the acquisition a powerful cash machine, which will help the company in the future transactions. After the acquisition, Concordia will have sales volume to the tune of $870-$920 million in 2015 including $530-$560 million from Amdipharm.

Until recently, Concordia's preference for acquisition was for US assets, whereas now, it's focusing on global basis.