Are Generic Drug Makers Entering Merger Frenzy After Teva/Barr?
Barr Phamaceuticals Inc. (NYSE: BRL) actually turned out to be a real merger. Teva Pharmaceutical Industries (NASDAQ: TEVA) has agreed to acquire the generic US-drug maker in a merger valued at $7.46 Billion in cash and stock. The breakdown is $39.90 cash and 0.6272 shares of TEVA for total of $66.50 before any dilution. This is after the stock closed up more than 23% yesterday on reports that Teva was interested in buying the company.
Teva is a huge generic drug makers and it has some of its own brand name drugs. What you have to wonder is just how many other mergers are out there that could actually come to pass in the generic sector. Generics are likely to do well in sales as a sector because of medical and health care cost containments and because so many key blockbuster drugs are coming off of patent in 2009 to 2011.
On an individual basis these companies are essentially stepping on each others’ toes as they frequently get FDA approvals for the same drugs as other generic companies after the brand drugs come off patent. It also doesn’t help when brand drug Big Pharma companies decide to sell their brand drug for the same price as generics after they come off of patent.
So maybe mergers in the generic drug sector are inevitable. Here is a list of some of the larger generic drug companies:
- Mylan, Inc. (NYSE: MYL) $3.9 Billion market cap,
- Watson Pharma (NYSE: WPI) $3.1 Billion market cap,
- Par Pharma (NYSE: PRX) $610 million market cap.
As a reminder, there was a time period where King Pharmaceuticals Inc. (NYSE: KG) was trying to merge with Mylan, Inc. (NYSE: MYL). All of these stocks are trading up marginally so far this morning as of 10:00 AM EST.
Jon C. Ogg
July 18, 2008
Teva's Copaxone MS Franchise Under Generic Fire (TEVA, MYL)
Shares of Teva Pharmaceuticals (NASDAQ: TEVA) are under fire this morning, in a move which has more irony than one might guess. Mylan inc. (NYSE: MYL) has signed a licensing pact with India’s NATCO Pharma Ltd. to produce a generic version of Teva’s multiple sclerosis treatment called Copaxone.
This involves access to NATCO’s pre-filled syringes of glatiramer acetate, the generic name for Copaxone. Mylan gains exclusive distribution rights as part of the deal in the United States, major markets in Europe, Japan and elsewhere. NATCO already has commercialized its glatiramer acetate product in India and Ukraine.
Copaxone generated about $1.7 Billion in sales for Teva last year, and the company’s totsal currency-converted revenues were about $9.4 Billion. If you have followed Teva for some time you might appreciate the irony in this if you are not a shareholder. Guess were Teva’s largest revenues come from… generic drugs.
Teva closed at $44.76 yesterday and shares are down over $1.00 in pre-market trading on almost 500,000 shares with about 35 minutes to the open.
Jon Ogg
June 10, 2008
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