Teva of­fers to buy My­lan in US$40.1 bil. deal


Generic U.S. drug gi­ant Teva for­mally of­fered to buy fel­low drug­maker My­lan for about US$40.1 bil­lion (NT$1.25 tril­lion) in cash and stock on Tues­day, de­spite My­lan’s cold shoul­der and the cer­tainty the pro­posed ac­qui­si­tion will bring in­tense scru­tiny by an­titrust reg­u­la­tors.

If Is­rael-based Teva Phar­ma­ceu­ti­cal In­dus­tries Ltd. suc­ceeded, the com­bi­na­tion would dom­i­nate the global generic drug mar­ket, be a ma­jor con­tender in some other spe­cialty drug cat­e­gories — and have the lever­age to try to raise generic drugs prices.

Af­ter years of sta­bil­ity, generic medicine prices re­cently have risen sev­eral per­cent a year on av­er­age. Some have sky­rock­eted by up to 1,000 per­cent, gen­er­ally when com­pe­ti­tion van­ishes due to con­sol­i­da­tion or short­ages caused by man­u­fac­tur­ing qual­ity prob­lems.

A tie-up wouldn’t just in­crease Teva’s scale, al­low­ing it to boost prof­itabil­ity by cut­ting jobs and other costs. It would in­crease its lever­age in ne­go­ti­at­ing drug prices with in­sur­ers and other pay­ers, noted Les Funt­ley­der, health care port­fo­lio manager at E Squared As­set Man­age­ment.

“That’s go­ing to feed into reg­u­la­tors’ in­ter­est,” he said.

That’s par­tic­u­larly true in the U.S., where seven of eight pre­scrip­tions filled are for gener­ics and em­ploy­ers, in­sur­ers and gov­ern­ment health pro­grams en­cour­age their use to hold down costs.

“It doesn’t mean the deal can’t be done,” be­cause the com­pa­nies could di­vest some as­sets, Funt­ley­der said, but he noted My­lan’s re­luc­tance.

A My­lan spokes­woman did not im­me­di­ately re­turn a call seek­ing com­ment Tues­day.

On Fri­day, the Dutch com­pany said an­titrust reg­u­la­tors prob­a­bly wouldn’t ap­prove a deal and said it prefers to re­main a stand-alone com­pany and in­stead buy generic drug and in­gre­di­ents maker Per­rigo Co. PLC. How­ever Per­rigo re­jected My­lan’s of­fer Tues­day af­ter­noon. The Ir­ish com­pany said the bid, which val­ues Per­rigo at US$205 per share, or al­most US$29 bil­lion, is too low.

Teva’s bid for My­lan, part of the lat­est cy­cle of drug­maker con­sol­i­da­tion, would be one of the big­gest in the last cou­ple years, be­low Ac­tavis PLC’s re­cent US$66 bil­lion pur­chase of Al­ler­gan Inc., based on fig­ures from mar­ket re­search firm Eval­u­atePharma.

My­lan’s shares surged US$6.03, or 8.9 per­cent, to US$ 74.07 and reached an all-time high of US$74.90. Teva shares gained 87 cents, or 1.4 per­cent, to US$64.16.

Teva of­fered US$82 per share, a 21-per­cent pre­mium over My­lan’s Mon­day closing price, and said it could com­plete the deal by year’s end. Teva’s board has unan­i­mously ap­proved the of­fer.

Teva gets half its rev­enue from generic drugs and an­other fifth from its top brand-name medicine, mul­ti­ple scle­ro­sis drug Co­pax­one. Last Thurs­day, U.S. reg­u­la­tors ap­proved a generic ver­sion of Co­pax­one, which could hit phar­ma­cies around Septem­ber, en­dan­ger­ing US$4.2 bil­lion of Teva’s US$20 bil­lion in an­nual rev­enue.

That means Teva, which also makes re­s­pi­ra­tory, can­cer and non­pre­scrip­tion medicines, needs new rev­enue sources. In March it agreed to buy Aus­pex Phar­ma­ceu­ti­cals Inc., which is de­vel­op­ing cen­tral ner­vous sys­tem dis­or­der treat­ments, for US$3.2 bil­lion.

My­lan last year earned US$929.4 mil­lion on US$7.72 bil­lion in rev­enue, nearly 85 per­cent of that from the more than 1,400 generic drugs it sells. Its spe­cialty seg­ment sells the EpiPen al­ler­gic re­ac­tions treat­ment, which brought in US$1.19 bil­lion in 2014.


In this Oct. 16, 2013 file photo, trucks run past Teva Phar­ma­ceu­ti­cal Lo­gis­tic Cen­ter in the town of Shoam, Is­rael.

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