Teva Pharmaceuticals Buys Ratiopharm

Teva Pharmaceuticals, one of the biggest generic drug companies in the world, will acquire leading European generics company Ratiopharm for $5 billion. The New York Times reports:

“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.”

Ratiopharm had global sales of 1.9 billion euros in 2008, nearly half of which were in Germany, according to the company’s Web site. 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.

In winning Ratiopharm, Teva topped the world’s biggest maker of brand-name drugs, Pfizer, and Actavis, a generic maker based in Iceland. Ratiopharm’s parent company, VEM Vermögensverwaltung, put the company up for sale last year after the suicide of Adolf Merckle, who founded Ratiopharm in 1973.

The pharmaceutical industry has been seeing a lot of M&A during the past 6 months. I wouldn’t be surprised if drugs, even generics, soon come from only a handful of companies (a smaller handful than they already come from).

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