Teva spins the globe again
July 2011
by Kimberley Sirk  |  Email the author


JERUSALEM—Teva Pharmaceutical Industries Ltd. announced in mid-May that will add to its stable of global generic powerhouse companies Japan's privately held Taiyo Pharmaceutical Industry Co. Ltd. Teva will drop a cool $460 million so that it may call 57 percent of Taiyo its own.
Teva is courting the owners of the remaining shares of the generics company as well. If Teva is successful in purchasing all outstanding shares of Taiyo, Teva would find itself the owner of a company worth an estimated $1.3 billion.
The deal will be financed with a blend of cash on hand and debt.  
Taiyo is the third-largest generic pharmaceutical company in Japan, with sales of $530 million in 2010. The company says it has one of the most comprehensive generic product portfolios in the Japanese market with more than 550 generic drugs in a variety of therapeutic areas and dosage forms.  
Taiyo gains Teva presence in all major distribution channels in Japan, particularly in hospitals, due to Taiyo's wide range of injectable product offerings. Taiyo also brings production capabilities in a wide range of technologies in two manufacturing facilities, as well as a strong R&D team and local regulatory expertise.
Shlomo Yanai, Teva's president and CEO, says this acquisition helps Teva meet several of its long-range business goals.  
"This acquisition will enable Teva to deliver on our strategic objective of becoming a leading player in the fast-growing Japanese generics market," Yanai said in a prepared statement. "In fact, we now expect to reach our 2015 target of $1 billion in sales in Japan ahead of schedule."  
Over the past several years, Teva has been on an aggressive intercontinental buying spree, purchasing companies in the United States, Central America, Germany and now Japan. Most recently, Teva grabbed all the outstanding shares of Cephalon, with Teva saying at the time that the transaction reinforces Teva's long term strategy of building out its branded and specialty pharmaceuticals business through diversification and expansion of the company's product portfolio and pipeline.  
That transaction yielded Teva immediate and sustainable value in niche therapeutic areas including central nervous system conditions, oncology, respiratory and pain management. Yanai said in a prepared statement in January, when Teva purchased Peruvian company Corporation Infarmasa that "the acquisition of Infarmasa in Peru expands our activity in Latin America, and highlights our growth strategy for the coming years. Infarmasa complements Teva's activity in Peru and will advance our position as a market leader in this region."  
Infarmasa makes and sells branded and unbranded generic drugs, primarily corticosteroids, antihistamines, analgesics and antibiotics. Its portfolio consists of more than 600 registered products, of which more than 500 are currently on the market.  
Teva announced in March 2010 that it signed a deal to acquire German generics maker Ratiopharm. That acquisition was Teva's largest since its 2008 purchase of U.S. drugmaker Barr Pharmaceuticals Inc. for $7.4 billion. The Ratiopharm buy gave the Israeli drugmaker a top spot in the $8.6 billion German market for copied drugs, the world's second largest after the United States.  
At the time of the German deal, analysts opined that the acquisition was necessary to Teva's overarching growth goals, as Teva had become cognizant of the fact that it had limited options outside the United States for that growth. Although the U.S. market is Teva's biggest, Yanai noted at the time that he needs to reduce the company's dependence on that market. Some 60 percent of its sales at the time were U.S. sales, and the company wants to bring that to less than 50 percent by 2015.  
Of the Taiyo deal, Yanai said that Teva has "great respect for Taiyo's legacy and its experienced, talented and dedicated team and look forward to welcoming them into the Teva family."  
Japan is the second-largest pharmaceutical market in the world, valued at $96 billion in 2010. Of this impressive figure, it is estimated that merely 23 percent of that total is in generic products. The Japanese government has expressed its intention to increase generic penetration to 30 percent by 2012. Sanofi and Pfizer have also recently completed generics deals in this Asian nation.  
Teva expects to complete this transaction by the end of the third quarter of this year.  


Teva's first-quarter U.S. sales hit by factory problems  
JERUSALEM, Israel—Citing manufacturing quality- control concerns at its production plants here and in Irvine, Calif., Teva Pharmaceutical Industries Ltd. says generic drug sales in the United States —the pharma's biggest market—fell for a second straight quarter.
Sales of U.S. generics tumbled 32 percent. Teva reported revenues of $4.1 billion, missing the average analyst estimate of $4.29 billion.  
Teva CEO Shlomo Yanai said in a statement that growth is expected to perk up in the second half of the year, and the drop in the United States should not be viewed as a trend. Teva has been taking corrective actions at its Jerusalem plant since the company received a warning letter from the U.S. Food and Drug Administration (FDA) in January, Yanai told analysts in a conference call.  
"We of course have to wait until the FDA officially comes to do the requested re-inspection, but to be very simple and very clear, I think we did all the corrective actions that we think we had to do, and I think this is behind us," Yanai told analysts.
Bill Marth, CEO of Teva Americas, added that the company is working to rectify shipping shortages hampering U.S. plants.
Code: E071107

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