Teva and Barr: A match made in heaven?!

By Shilpa Nangali

Recently, Teva announced its plan to acquire Barr Pharmaceuticals. The Barr acquisition is the largest deal in the generics market to date, narrowly surpassing Teva's acquisition of Ivax at US$7.4 billion in 2005.

It is said that marriages are made in heaven. I do not know if it is true or not but marriages of companies are hot & happening right now!

The acquisition of Barr Pharmaceuticals was the focus of attention at an investors’ conference Teva Pharmaceutical Industries Ltd. held in New York. "Teva and Barr are a match made in heaven," said Teva CFO Eyal Desheh.

Teva president and CEO Shlomo Yanai reiterated his comments on the strategic fit between the company and Barr, and Barr's expected contribution to Teva at several levels. "1.6 million prescriptions for Teva and Barr drugs are filled every day in the US, double the number for Mylan drugs, which is in second place," he said.

Who knows, this marriage of Teva & Barr may be a boon for Teva! After this marriage,Teva can expand its leadership in the US market and fortify its presence in Europe. ;-)

There was an official meeting between Bruce Downey, Chief Executive of Barr Pharmaceuticals Downey and the Teva Executives, Shlomo Yanai and William Marth regarding the announcement of Teva’s agreement to pay $7.5 billion to acquire Barr. The deal is not expected to result in the immediate job losses in New Jersey, where Barr employs nearly 500 people. Downey said: “Teva has emphasized it wants to increase its manufacturing capabilities through the acquisition of Barr, and the combined company will need more staff to handle its additional business.”

Teva vice chairman Philip Frost is a man, who was once at the target side of a Teva acquisition when he headed Ivax Corporation, acquired by Teva three years ago. He added, "On behalf of the board of directors, but more importantly, as an investor in Teva, I want to thank Shlomo for this good deal for Teva." He also praised Barr chairman and CEO Bruce Downey as a "dear friend and colleague" and said that they were now members of the same family.

Teva's proprietary product portfolio currently consists of only two drugs, namely, Copaxone (glatiramer acetate) and Azilect (rasagiline). Although Azilect's latest clinical trial results have touted it as a blockbuster molecule, Teva's ambitions to extend the patent on its leading proprietary molecule, Copaxone, were dashed when its FORTE trials results reported findings of no added efficacy at a higher dosage.

Additionally, Teva’s Copaxone enterprise has been threatened by Momenta-Sandoz's Para IV filings and Mylan-Natco's marketing agreements for generic Copaxone. Copaxone’s patent reportedly expired during the drug development process with complete patent expiration on the drug due in 2014 and 2015 in the US and Europe, respectively.

Yoav Burgan, pharmaceuticals analyst at Leader Capital Markets in Tel Aviv, said that Teva's management was under pressure to make a high-quality deal due to a number of recent setbacks, such as losing out to Mylan Inc on buying Merck KGaA's generics business, as well as its disappointing results on its 40-mg Copaxone tests and the potential long-term generic competition for its 20-mg version of Copaxone.

Shlomo Yanai scoffed at the idea that the disappointing Copaxone results forced the company to make the deal. In landing the biggest acquisition ever by an Israeli company, Yanai applied the long-term strategic thinking of a seasoned military general. Analyst Aaron Gal said that the purchase of Barr does not solve Teva's problem with Copaxone, a proprietary drug for multiple sclerosis, which faces a decline in sales in 2012. Gal expects Copaxone to face new competition in 2012. The drug accounted for 18 percent of Teva’s sales last year.

References: Global Insight Daily Analysis, Market News Publishing, Reuters, Associated Press Newswire, The Philadelphia Inquirer, Israel Business Arena and NJ.com.