Swiss pharmaceutical company Novartis AG (NYSE: NVS) announced Wednesday it would acquire Melville, N.Y.-based Fougera Pharmaceuticals Inc. for 1.5 billion in cash.

The deal makes Sandoz, Novartis's generic pharmaceuticals division, the world's largest maker of generic dermatological drugs.

Fougera's seller is a group of investors from Nordic Capital, DLJ Merchant Banking (a Credit Suisse affiliate) and Avista Capital Partners. Last year Fougera broke away from Nycomed International after the Swiss company was acquired by Japan's Takeda Pharmaceutical (TYO: JP: 4502). Jefferies & Co. served as the exclusive financial advisor for this transaction.

In explaining the reason for the acquisition, Novartis pointed to the U.S. market for dermatology generics, which generated $2.1 billion in sales last year and has had double-digit growth in recent years. According to IMS data, Fougera and Sandoz combined would generate annual sales of $620 million.

Fougera, which employs about 700, all in New York state, reported $429 million in net sales last year. It operates two divisions: Fougera, which produces the generic dermatology products, and PharmaDerm, which makes 17 brands of ointments and creams.

Fougera has strong dermatology development and manufacturing expertise, with numerous launches planned for 2012 and beyond, the announcement said.

The deal is pending regulatory approval and is expected to close in latter half of this year.