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Teva offers $40bn for Mylan as Perrigo backs away

Generic drug industry could be shaken up if deals go through

Mylan building 

A long-predicted merger between two generic drug giants looks increasingly likely, with Israel's Teva tabling a $40bn offer for Dutch rival Mylan just as the latter's defensive bid for Perrigo is rejected.

The unsolicited $82-per-share offer for Mylan comes after the US firm took the unusual step of publicly stating its opposition to a Teva takeover earlier this month, saying it was "without sound industrial logic or cultural fit."

Investors are now waiting to see if Mylan raises its $30bn offer for Perrigo, which has been rejected by the Irish drugmaker's board as "substantially undervaluing" its business.

Perrigo went on to say that the offer as it stands does not take into account its pipeline, "which is expected to generate nearly $1bn in net sales over the next three years."

Teva meanwhile insists its offer provides better value for Mylan shareholders than a Perrigo tie-up and would "create a leading company in the pharmaceutical industry, well positioned to transform the global generics space."

The combined company would have sales of around $30bn a year - catapulting it onto the top 10 pharma companies by 2014 revenues according to PMLiVE's Top Pharma List - and operating profits of around $10bn, with the opportunity to trim some $2bn a year off its cost base, according to Teva.

It would have around 400 generic drug marketing applications, of which 80 would be first filings with a period of marketing exclusivity in the US, and expects sales to reach $33bn in 2018 with operating profit of $13bn.

Teva's offer comes just after the first generic version of its big-selling multiple sclerosis (MS) therapy Copaxone (glatiramer acetate), which accounted for 21% of revenues last year, was approved by the FDA.

With 75% of Copaxone sales coming from the US, the forthcoming launch for the generic - developed by Sandoz and Momenta - makes it important for Teva to take action to offset and dilute the expected loss in revenues.

The company has been under pressure by its investors for some time to enter the M&A fray and at the end of last month it announced a $3.5bn agreement to buy central nervous system (CNS) therapy specialist Auspex.

Teva CEO Erez Vigodman said that "as one company, we would have the infrastructure and capabilities to faster pursue a differentiated business model, fully integrating specialty and generics drugs with products, devices, services and technologies to meet the evolving needs of patients and customers."

Mylan had yet to issue a formal response to Teva's offer as this article went to press.

Article by
Phil Taylor

22nd April 2015

From: Sales

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