Teva spins the globe again
In effort to reduce reliance on U.S. markets, Teva cuts another global deal
JERUSALEM—Teva Pharmaceutical Industries Ltd. announced inmid-May that will add to its stable of global generic powerhouse companiesJapan's privately held Taiyo Pharmaceutical Industry Co. Ltd. Teva will drop acool $460 million so that it may call 57 percent of Taiyo its own.
Teva is courting the owners of the remaining shares of thegenerics company as well. If Teva is successful in purchasing all outstandingshares of Taiyo, Teva would find itself the owner of a company worth anestimated $1.3 billion.
The deal will be financed with a blend of cash on hand anddebt.
Taiyo is the third-largest generic pharmaceutical company inJapan, with sales of $530 million in 2010. The company says it has one of themost comprehensive generic product portfolios in the Japanese market with morethan 550 generic drugs in a variety of therapeutic areas and dosage forms.
Taiyo gains Teva presence in all major distribution channelsin Japan, particularly in hospitals, due to Taiyo's wide range of injectableproduct offerings. Taiyo also brings production capabilities in a wide range oftechnologies in two manufacturing facilities, as well as a strong R&D teamand local regulatory expertise.
Shlomo Yanai, Teva's president and CEO, says thisacquisition helps Teva meet several of its long-range business goals.
"This acquisition will enable Teva to deliver on ourstrategic objective of becoming a leading player in the fast-growing Japanesegenerics market," Yanai said in a prepared statement. "In fact, we now expectto reach our 2015 target of $1 billion in sales in Japan ahead of schedule."
Over the past several years, Teva has been on an aggressiveintercontinental buying spree, purchasing companies in the United States,Central America, Germany and now Japan. Most recently, Teva grabbed all theoutstanding shares of Cephalon, with Teva saying at the time that thetransaction reinforces Teva's long term strategy of building out its brandedand specialty pharmaceuticals business through diversification and expansion ofthe company's product portfolio and pipeline.
That transaction yielded Teva immediate and sustainablevalue in niche therapeutic areas including central nervous system conditions,oncology, respiratory and pain management.
Yanai said in a prepared statement in January, when Tevapurchased Peruvian company Corporation Infarmasa that "the acquisition ofInfarmasa in Peru expands our activity in Latin America, and highlights ourgrowth strategy for the coming years. Infarmasa complements Teva's activity inPeru and will advance our position as a market leader in this region."
Infarmasa makes and sells branded and unbranded genericdrugs, primarily corticosteroids, antihistamines, analgesics and antibiotics.Its portfolio consists of more than 600 registered products, of which more than500 are currently on the market.
Teva announced in March 2010 that it signed a deal toacquire German generics maker Ratiopharm. That acquisition was Teva's largestsince its 2008 purchase of U.S. drugmaker Barr Pharmaceuticals Inc. for $7.4billion. The Ratiopharm buy gave the Israeli drugmaker a top spot in the $8.6billion German market for copied drugs, the world's second largest after theUnited States.
At the time of the German deal, analysts opined that theacquisition was necessary to Teva's overarching growth goals, as Teva hadbecome cognizant of the fact that it had limited options outside the UnitedStates for that growth. Although the U.S. market is Teva's biggest, Yanai notedat the time that he needs to reduce the company's dependence on that market.Some 60 percent of its sales at the time were U.S. sales, and the company wantsto bring that to less than 50 percent by 2015.
Of the Taiyo deal, Yanai said that Teva has "great respectfor Taiyo's legacy and its experienced, talented and dedicated team and lookforward to welcoming them into the Teva family."
Japan is the second-largest pharmaceutical market in theworld, valued at $96 billion in 2010. Of this impressive figure, it isestimated that merely 23 percent of that total is in generic products. TheJapanese government has expressed its intention to increase generic penetrationto 30 percent by 2012. Sanofi and Pfizer have also recently completedgenerics deals in this Asian nation.
Teva expects to complete this transaction by the end of thethird quarter of this year.
Teva's first-quarter U.S. sales hit by factory problems
JERUSALEM, Israel—Citing manufacturing quality-controlconcerns at its production plants here and in Irvine, Calif., TevaPharmaceutical Industries Ltd. says generic drug sales in the United States—thepharma's biggest market—fell for a second straight quarter.
Sales of U.S. generics tumbled 32 percent. Teva reportedrevenues of $4.1 billion, missing the average analyst estimate of $4.29billion.
Teva CEO Shlomo Yanai said in a statement that growth isexpected to perk up in the second half of the year, and the drop in the UnitedStates should not be viewed as a trend. Teva has been taking corrective actionsat its Jerusalem plant since the company received a warning letter from theU.S. Food and Drug Administration (FDA) in January, Yanai told analysts in aconference call.
"We of course have to wait until the FDA officially comes todo the requested re-inspection, but to be very simple and very clear, I thinkwe did all the corrective actions that we think we had to do, and I think thisis behind us," Yanai told analysts.
Bill Marth, CEO of Teva Americas, added that the company isworking to rectify shipping shortages hampering U.S. plants.