Global Insight Perspective | |
Significance | Pliva is Central and Eastern Europe’s leading pharmaceutical firm by sales and speculation over the likely takeover bidder has been rife. |
Implications | The acquisition will see Barr secure a significant share of the generics market within this emerging region. The purchase will bolster Barr’s sales power at a time of heightened competition and considerable consolidation in the global generics market. |
Outlook | Should this takeover bid proceed, the deal would yield an entity able to draw on strong marketing prowess in Europe and the U.S., as well as a company with a comprehensive portfolio of generic therapies. Furthermore, Pliva’s biologic research programme would be boosted by greater financial resources, with biopharmaceuticals likely to emerge as an area of strength for the merged company. |
Croatian firm Pliva has reportedly endorsed a US$2.2-billion acquisition bid by U.S. generics giant Barr Laboratories. According to AFX International Focus, Pliva has backed Barr's proposal "to make a tender offer for the whole company".
Under the terms of the proposed agreement, the U.S. company would make payments to Pliva shareholders equivalent to approximately US$24.42 per Global Depositary receipt at current exchange rates. Barr reportedly plans to make a tender offer for Pliva shares later this year, but will first need to get approval from the Croatian Agency for Supervision of Financial Services, as well as from regulatory authorities in the U.S. The source sites Bruce L. Downey, Barr’s Chairman and CEO, who states that the newly merged firm should achieve annual revenue of some US$2.5 billion.
Pliva’s acceptance of Barr's proposed takeover ends weeks of speculation over who might purchase this key European drug maker. The U.S. company has beaten proposed bids by several other prominent players in Central and Eastern Europe – including Iceland’s Actavis and Poland’s Polpharma
Outlook and Implications
The Pliva acquisition would constitute Barr’s first overseas purchase. It comes as the U.S. player feels the squeeze of increasingly heightened competition in the global generics market, which has been undergoing a period of consolidation with the emergence of a so-called breed of 'super-generic firms', epitomised by the Swiss drug giant Novartis' expansion of its Sandoz generics division in 2005 (see Switzerland: 21 February 2005: Acquisitions Push Novartis into Pole Position in Global Generics Market).
Pliva is an obvious acquisition target for Barr, since it will significantly raise its sales and marketing power in the emerging markets of Central and Eastern Europe. Should this takeover bid proceed successfully, the newly merged company will be able to harness the marketing prowess of Pliva in Europe, and that of Barr in the U.S. The two companies have already established a relationship through a deal for the development of a key biogeneric – a generic version of Amgen’s (U.S.) Neupogen (filgrastim). For Pliva, the takeover would provide significant financial support for a more comprehensive programme of biologic research and development, with biopharmaceuticals likely to emerge as an area of strength for the newly formed company.
The amalgamation of these two firms would also assemble a very comprehensive portfolio of products across a broad range of complementary industry segments - from finished generic formulations and innovative delivery technologies to a range of active pharmaceutical ingredients (API). While this takeover agreement is still to be formalised and approved, a dominant new generics company looks set to emerge onto the scene by the end of 2006.