Teva Could Modify Its "Authorized" Generic Policy Following Ivax Acquisition
This article was originally published in The Pink Sheet Daily
Executive Summary
Deal worth $7.4 bil. brings Teva a new subsidiary that participates in the authorized generic market.
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Teva may reconsider its resistance toward "authorized" generics following the company's $7.4 bil. acquisition of Ivax. "Absent legislative change, for the moment, authorized generics are part of our landscape," Teva North America CEO George Barrett said during a July 25 call announcing the deal. "We will definitely consider the new situation in the market and might reconsider our policy," CEO Israel Makov said. A D.C. federal appeals court recently upheld FDA's refusal to block NDA holders from licensing or launching authorized generics. The appellate ruling closed a lawsuit filed by Teva against the agency (1 (Also see "FDA’s Policy On “Authorized” Generics Upheld By Appeals Court" - Pink Sheet, 6 Jun, 2005.)). Ivax markets branded products as well as authorized generics; the company recently began marketing an authorized generic of Purdue's OxyContin (oxycodone extended-release). Fellow generic drug manufacturer Mylan also appears to be retreating from its staunch opposition of authorized generics. The company recently said it was prepared to participate in the market despite its opposition to such deals (2 (Also see "If You Can’t Beat Them, Join Them: Mylan Reconsiders “Authorized” Generics" - Pink Sheet, 14 Jun, 2005.)). The acquisition of Ivax will create a 25,000-person company with direct operations in 50 countries and annual sales of more than $7 bil. The deal will allow Teva to rapidly expand into Latin America and Central and Eastern Europe and will bring the firm 250 sales reps and 24 manufacturing plants. Teva expects to realize cost synergies of $150 mil. during the first two years and to offer at least 300 products in the U.S. with a pipeline three times larger than that of its nearest competitor, Makov said. The deal also helps position the company for the Medicare Part D benefit ( 3 (Also see "Limited ANDA Overlap With Ivax Creates Strong Position For Part D Benefit, Teva Says" - Pink Sheet, 25 Jul, 2005.) ). Under the terms of the agreement, shares of Ivax common stock will be converted into either $26 in cash or 0.8471 Teva shares. Ivax will become a subsidiary of Teva. The deal is expected to close in late 2005 or early 2006. - Andrew Shelton |