from the April 2010 issue

Teva buys German Ratiopharm

Teva Pharmaceutical Industries, the global leader in generic drugs, said that it had reached a deal to acquire the German generic drug maker Ratiopharm, ending a nine-month battle that had pitted it against at least two other bidders, one of them thought to be the brand-name drug giant Pfizer. Teva will pay about 3.6 billion euros - or nearly $5 billion - and expects to complete the transaction by the end of the year.

The deal will catapult Teva from fifth place among German generic players to the No. 2 spot.

Ratiopharm is a privately held company based in Ulm and it did not make the names of the bidders public. But, in winning Ratiopharm, analysts said, Teva topped the world's biggest maker of brand-name drugs, Pfizer, and Actavis, a generic maker based in Iceland.

"This transaction is perfectly aligned with our long-term strategy in which Europe is an important pillar and growth driver," the chief executive of Teva, Shlomo Yanai, said in a statement. "Ratiopharm will provide us with the ideal platform to strengthen our leadership position in key European markets, most notably in Germany, as well as rapidly growing generic markets such as Spain, Italy and France."

The combined company would have had in 2009 revenues of $16.2 billion, the statement said.

Ratiopharm had global sales of 1.9 billion euros in 2008, nearly half of which were in Germany. But Ratiopharm also sells its products in more than 30 other countries, including established markets like Spain and Canada and emerging economies like Russia. Over all, it is the world's fifth-largest maker of generics, accounting for 3 percent of the global market, a report last year from BCC Research said. For its part, Teva has been aggressively expanding its global leadership in generics, in part through acquisitions. Two years ago it acquired Barr Pharmaceuticals, an American company, for about $7.5 billion. And Teva has indicated that it planned additional deals.

Ratiopharm's parent company, VEM Vermšgensverwaltung, put the company up for sale last year after the suicide of Adolf Merckle, who founded Ratiopharm in 1973.

Last month, the American drug maker Cephalon said it would buy another Merckle family asset, the Swiss generic maker Mepha, for an estimated $590 million. Ratiopharm is an attractive target because Germany is the second largest generic market in the world, and Ratiopharm is the second biggest generics purveyor there. Germans spent about $7.9 billion on generics in 2009, according to IMS Health, a health information company.. In Germany, Ratiopharm is the second-largest generics purveyor behind Hexal, a part of the Sandoz division of the Swiss drug maker Novartis, but just ahead of another local generic-drug maker, Stada Arzneimittel, analysts said.

Ratiopharm specializes in drugs for cardiovascular, respiratory, central nervous system and metabolic disorders as well as in anti-infective medications.

Reprinted from the Israel High-Tech & Investment Report April 2010

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