Teva Is Prepared For Major Acquisition After Barr Buy, Chief Says
Teva is seeking targets to diversify in patented medicines as well as increase its market share in generic drugs, Yanai, 57, said in an interview yesterday at the companys headquarters in Petah Tikva, Israel. Teva may be interested in companies including King Pharmaceuticals Inc. and Endo Pharmaceuticals Holdings Inc., said Ken Cacciatore, an analyst at Cowen & Co.
“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,” Yanai said. “We are not limiting ourselves to buying only generic companies.” He declined to name possible targets.
The executive marked a new course for Teva, the worlds largest generic-drug maker. Yanai had said last month that the company would probably spend “the next year or two” digesting the Barr purchase.
Teva also may want to buy Shire Plc, Acorda Therapeutics Inc. and BioMarin Pharmaceuticals Inc., according to Cacciatore, whos based in New York.
Investors would welcome a move to plug the gap that will arise when Tevas multiple sclerosis medicine Copaxone, which accounts for as much as 35 percent of the drugmakers earnings, faces competition, Cacciatore wrote in a report to investors yesterday.
Novartis, Merck
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.
Novartiss generics arm Sandoz and Cambridge, Massachusetts-based Momenta Pharmaceuticals Inc. are seeking U.S. clearance for a copy of Copaxone. Teva sued the partners in August to block approval until 2014. Momenta last week named Bruce Downey, the former chairman and chief executive officer of Barr, to the Teva board.
Tevas specialty, or non-generic, business will become more diversified and is big enough to “mitigate any hurdles,” Yanai said. “Every product has a life cycle.”
Generic medicines account for about 70 percent of Tevas sales while patented medicines make up the rest. While an “opportunistic” acquisition may shift the ratio, that isnt the companys goal, Yanai said.
Womens Health
Rather than buy a company, Teva may decide to purchase specific products, such as branded pharmaceuticals to supplement Tevas respiratory and womens health franchises, he said.
The Israeli drugmaker said this year it wants to build the womens health operations it acquired from Barr into a billion- dollar annual business. Sales in the first quarter rose 39 percent to $97 million.
A King Pharmaceuticals spokesman, Jack Howarth, said the Bristol, Tennessee-based company doesnt comment on rumors as a matter of policy. Kevin Wiggins, a spokesman for Chadds Ford, Pennsylvania-based Endo, made a similar statement. A spokesman for Hawthorne, New York-based Acorda, Jeff Macdonald, also said he couldnt comment on speculation.
Susan Berg, a spokeswoman for Novato, California-based BioMarin, and Jessica Mann, a spokeswoman for Basingstoke, England-based Shire, didnt immediately return calls for comment.
Resources and Capability
“We have the resources and the capability to fund even a major acquisition,” Yanai said, defining “major” as “at the level of Barr and above.”
Teva expects to generate more than $20 billion in free cash flow through 2015 and could “definitely” finance an acquisition the size of the Barr purchase, Desheh said. The company wont refinance the bridge loan it took to buy Barr, Desheh said. “We are just going to pay it all back.”