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Actavis makes move for Pliva

Consolidation is the name of the game as Icelandic firm looking to become world's third largest generics firm
 
Actavis makes move for Pliva
Novartis to challenge AstraZeneca
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Actavis, from Iceland, is aiming to become the world's third largest generics company after submitting a preliminary bid of $1.6bn for Croatian rival Pliva.

However, Pliva has rejected the bid, saying it undervalues the company. The non-binding offer, valued at 570 Croatian kunas (about $95) a share represents a 35 per cent premium over Pliva's average share price over the past three months.

After a string of acquisitions last year in India, Poland and the Czech Republic, Actavis is seeking to gain ground on frontrunners Novartis and Teva in a generic market that could be worth $90bn by 2010.

The move is a further sign that generics firms see consolidation as the best way of achieving economies of scale, with many top molecules coming off patent in the coming years. In January, Teva became the market leader after it acquired Ivax for $7.4bn. Last year, Novartis' generic unit Sandoz bought Hexal and Eon Labs in 2005.

Actavis chief executive, Robert Wessman, said a combination of Actavis and Pliva would have ìa leading presence in the key European, Russian and US marketsî and his firm hoped to enter talks with Pliva's management and board ìin the coming daysî.

Croatia would become the hub for Central and Eastern Europe and a key centre for future R&D and manufacturing, providing significant support for all of our other international markets,î he added.

Analysts said that Pliva's strong presence in Croatia, Germany and Poland would complement Actavis' presence in markets such as Serbia and the US.

ìGeographically, it makes a lot of sense for Actavis and Pliva to hook up, because they're pretty complementaryî said generics analyst, Frances Cloud at Nomura Code Securities. ìBy and large, Pliva is fairly strong where Actavis is fairly weak.î

Last year, Actavis' full-year sales rose 28 per cent to Ä579.3m ($705.4m) while net profits rose 26 per cent to Ä81m from the previous year.

According to Datamonitor, R&D-based pharma firms will have lost about $82bn in sales of drugs losing patent protection between 2002 and 2007. Currently, Novartis is the only one of the world's top ten drug manufacturers with a significant generics business.

30th September 2008

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