Teva (Israel) has completed the acquisition of Allergan (Ireland/US)'s generics business.
Implications | The acquisition provides Teva with an opportunity to expand its business across the world. |
Outlook | The contribution of Actavis (the generics division of Allergan) to Teva's portfolio will increase the Israeli company's revenue, while the deal would generate net efficiency savings of USD1.4 billion during the next three years. |
Teva (Israel) has finally completed the USD40-billion acquisition of Actavis (the generics arm of Allergan (Ireland/US), according to Teva's press release. Following the acquisition, Teva now has about 338 product registrations pending US FDA approval and holds first-to-file opportunities with approximately 115 pending abbreiviated new dru applications (ANDAs) in the United States. Allergan was the third-largest manufacturer in the global generics market by sales and had a niche portfolio of specialised generic drugs.
In March, the European Commission approved the deal, with the condition that Teva would sell a number of overlapping molecules in 24 European countries, excluding the United Kingdom, Ireland, and Iceland. Teva agreed to address the concerns of the European Commission by divesting a number of drugs, including some that are already being marketed and some that are in the pipeline. According to Teva's press release, Teva is now ready to benefit from the acquisition of Actavis without overlap or duplication of the products.
Teva's presence in the global pharma market
The Israeli manufacturer, even before this acquisition, was the world's largest manufacturer of generic drugs. Teva is also seeking to expand its portfolio to add speciality medicines to its vast range of generic drugs. It made another large acquisition in Mexico and is building a joint venture (JV) in Japan (see Mexico - Israel: 4 March 2016: Teva completes acquisition of Rimsa and Japan - Israel: 30 November 2015: Teva to target Japan through partnership with Takeda). Moreover, at the moment, Teva has achieved substantial growth in Asia, Africa, Latin America, the Middle East, and Russia and the CIS markets. Following the Allergan deal, it now has about 600 pending product approvals in these pharma markets. In Europe, Teva will have a pipeline of more than 5,000 products to be launched across the European countries. In the UK, Teva's business is expanding, particularly in therapeutic areas such as cystic fibrosis and with some over-the-counter (OTC) products. According to Erez Vigodman, Teva' CEO, "After this acquisition, one in six prescriptions in the US, one in six in the UK, one in eight in Germany will be Teva." Teva expects the combined entity to have a presence across 100 markets.
Outlook and implications
Forward-looking statements from Teva suggest that Allergan's drugs would allow the company to update generics production, reduce duplication in its portfolio, and focus on high-value generics, biosimilars, and innovative products in key therapeutic areas. Teva recorded net revenues of USD19.6 billion in 2015, and it has been estimated that the Actavis acquisition will substantially boost these to at least USD26.7 billion by 2019. Revenues will also be boosted if Teva launches 1,500 generics globally in 2017, as it is currently planning.