There looks set to be further consolidation in the generics sector with Teva offering to acquire Barr Pharmaceuticals in a deal worth $7.5bn
Barr has been a highly sought-after acquisition target, with its executives revealing 12 approaches had been made in the past 16 years and Teva alone making three inquiries in the last seven years.
Upon completion of the acquisition Teva would have 24 per cent of the US market, more than 500 drugs and increased presence in the growth markets of Central Eastern Europe (CEE), according to Teva’s CEO Shlomo Yanai.
Yanai said: "The acquisition of Barr will elevate Teva's market leadership to a new level. The combination of our two companies provides an outstanding opportunity strategically and economically: It will enhance our market share and leadership position in the US and key global markets, further strengthen our portfolio and pipeline, and provide upside to our strategic plan.”
Yanai and Barr’s CEO Bruce Downey first discussed the deal outside a Florida hamburger restaurant last April while attending an industry conference.
The deal should mark the end of Teva’s large-scale US acquisitions as on completion of the Barr takeover the company will be approaching the 30 per cent market share that is generally the watershed for initiation of antitrust regulations.
Strengthening of its already dominant US market position is only one aspect of the deal though, with Barr’s portfolio and position in other markets proving attractive to the generics giant.
This strengthening and broadening of Teva’s reach is complemented by its successful API division, which saw its sales rise by 51 per cent to $510m in the first quarter of 2008.
Teva has been actively trying to position itself to capitalise on the potentially sizeable biogenerics market, with Barr’s presence in the field adding to that gained through the $400m acquisition of CoGenesys.
Barr’s portfolio, covering biologics and small molecules, is complementary with Teva’s according to Yanai, who believes there is “minimal overlap” between the two companies.
In addition the deal strengthens Teva’s presence in CEE, which Barr gained a foothold in through its $2.5bn acquisition of Croatian drugmaker Pilva in 2006.
This looks set to become an increasingly competitive marketplace, with Sanofi-Aventis currently attempting to buyout Czech-based generic manufacturer Zentiva NV for $2.1bn.
Teva has been using acquisitions to enter new markets, for example the anticipated buyout of Bentley Pharmaceuticals is intended to give access to Spain. Through growth and buyouts Teva now has a presence in over 60 countries.