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Teva looking for ‘major’ acquisition Posted 31/08/2009

Just a year after swallowing the US$7.4 billion (Euros 5.3 billion) Barr Laboratories buy, Teva Pharmaceutical Industries is ready for another ‘major’ acquisition and may look beyond generic drugs for the purchase, CEO, Mr Shlomo Yanai, said. According to him, Teva is seeking targets to diversify in branded medicines as well as increase its market share in generic drugs. “If we find a target that is in line with our strategy in the specialty area, in the biotechnology area, we definitely are going to consider it,” Mr Yanai said. “We are not limiting ourselves to buying only generic companies.” He declined to name possible targets.

Any purchases should fit with Teva’s central nervous system or inhalers franchises or contribute marketing resources for copies of biotechnology drugs, said Mr Ori Hershkovitz, Head of Pharmaceutical Research at Sphera Funds Management in Tel Aviv, Israel. He named almost a dozen possible targets, including Bermuda-based Warner Chilcott to expand in women’s health. Investors would welcome a move to plug the gap that will arise when Teva’s multiple sclerosis medicine Copaxone, which accounts for as much as 35% of the drugmaker’s earnings, faces competition, Cacciatore wrote in a report to investors. Novartis AG, based in Basel, Switzerland, and Merck KGaA of Darmstadt, Germany, are developing oral drugs that may compete with Copaxone as early as next year. Merck has said it plans to seek regulatory approval this year for its MS pill, cladribine. Novartis’s generics arm Sandoz and Momenta Pharmaceuticals, based in Cambridge, Massachusetts, USA, are seeking US clearance for a copy of Copaxone. Teva sued the partners in August 2008 to block approval until 2014. Momenta last week named Mr Bruce Downey, the former Chairman and CEO of Barr, to its board.

Teva’s specialty, or non-generic, business will become more diversified and is big enough to “mitigate any hurdles,” Mr Yanai said. “Every product has a life cycle.” Generic medicines account for about 70% of Teva’s sales while patented medicines make up the rest. While an ‘opportunistic’ acquisition may shift the ratio, that isn’t the company’s goal, Mr Yanai said. Teva is likely to look for companies with newly introduced drugs or medicines in the late stages of clinical testing and may seek branded generics, especially in regions where the company isn’t so active today, Chief Financial Officer, Mr Eyal Desheh, said in a separate interview. Rather than buy a company, Teva may decide to purchase specific products, such as branded pharmaceuticals to supplement Teva’s respiratory and women’s health franchises, he said. The Israeli drugmaker said this year it wants to build the women’s health operations it acquired from Barr into a billion dollar annual business. Sales in the first quarter rose 39% to US$97 million (Euros 69.4 million). “We have the resources and the capability to fund even a major acquisition,” Mr Yanai said, defining ‘major’ as “at the level of Barr and above.”

“This is diversification,” Mr Desheh said. “It’s no longer the pure US-based generic company” that’s dependent on challenging patents in the US. “I can see a much more diversified company, looking five to 10 years down the road.”

Source: Bloomberg, Scrip

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