Teva Pharmaceuticals (TEVA) said it has agreed to buy the generic drug business of
The deal will put Teva among the largest drug makers in the world and give the combined generic drug markers “a commercial presence across 100 markets, including a top three leadership position in over 40 markets,” the companies said this morning.
The deal, which will pay Dublin-based Allergan $33.75 billion in cash and shares of Teva that are valued today at $6.75 billion, has been approved by the boards of both companies. It follows other purchases of generic and specialty pharmaceutical companies like the purchase earlier this year by
Around the world, emerging markets like China, India, Brazil and Russia are spending more on prescription medicines. In particular, they are interested in branded generics or what the industry calls "established pharmaceuticals," which have become a hot business.
Drug markers see older brands as important where the economies are growing but access to safe prescription medicines, particularly generics, has been an issue of concern. Outside the U.S., regulations on generic substitution are not as strong so patient and doctor loyalty to brands that have come off patent protection still exist.
Branded generics in India, for example, make up more than 70% of the market, according to a 2010 report by
“Through our acquisition of Allergan Generics, we will establish a strong foundation for long-term, sustainable growth, anchored by leading generics capabilities and a world-class late-stage pipeline that will accelerate our ability to build an exceptional portfolio of products – both in generics and specialty as well as the intersection of the two,” said Erez Vigodman, Teva's president and CEO. "Our respective portfolios of generic medicines and applications are highly complementary, providing Teva with high quality growth and earnings visibility, and the scale and resources to expand upon our specialty capabilities."
In the U.S., having a large portfolio of generic medicines will also come in handy when negotiating with health insurance companies and pharmacy benefit managers that are becoming larger and gaining more clout. The health insurance market in the U.S. is consolidating and pharmacy benefit plans say they are looking for ways to reduce costs and negotiating better deals with drug makers is critical to that even as more Americans gain coverage under the Affordable Care Act.
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Teva said the deal will advance is research and development capabilities with about 320 combined pending new drug applications for generic launchings in the U.S.
