Teva agrees to buy Allergan's generics distribution unit
Teva Pharmaceutical Industries agreed to buy a generics distribution company from Allergan for $500 million, the drug makers said Wednesday, a day after Teva completed the purchase of Allergan’s generics business and became the world’s largest generics maker.
The new acquisition of Anda, the fourth largest distributor of generic medicines in the U.S., will firm Israel-based Teva’s footing in American markets and strengthen its supply chain network, said Siggi Olafsson, president and CEO of Global Generic Medicines Group, Teva’s generics arm.“This strategic move enables us and our customers to improve capabilities and flexibility given the changes the pharmaceutical industry is currently undergoing, in order to provide access to more patients throughout the country,” he said.Anda distributes generic, brand, specialty and over-the-counter medicines from 300 some manufacturers to retail pharmacies, nursing homes, hospitals and clinics across the U.S. It’s expected to generate $1.5 billion in sales excluding Allergan’s own products, according to a press release.The distributor will operate as a stand-alone business and report directly to Olafsson, he said in the statement.Teva will buy three distribution centers in Olive Branch, Miss., Weston, Fla. and Groveport, Ohio, which together employ more than 650 workers.The transaction is pending antitrust clearance, but Allergan said it expects to close the deal by yearend.When the two large medicine makers started talks about Allergan’s generics unit in 2015, they didn’t have enough time to talk about Anda, according to a note to investors from Allergan. But later, Allergan concluded that “Teva was the natural and most logical buyer.”In July 2015, Teva bought Allergan’s Actavis Generics for $33.75 billion in cash and about 100 million Teva shares, which summed to $40.5 billion then.The deal not only expands Teva’s generics market share, but also hedges risks facing the company’s Multiple Sclerosis injection, Copaxone, from potential generic competitions. Several legal decisions in the next 12 -18 months could change the blockbuster’s outlook.Teva estimates the combined generics business to generate $25 billion of free cash flow and $1.4 billion in tax and operational savings by the end of 2019, according to the company’s outlook presentation.The cash flow would allow Teva to borrow at a lower rate and “give us the ability to pursue acquisitions of attractive branded and pipeline assets, biosimilar products, as well as deals that would expand our footprint in key growth markets,” CEO Erez Vigodman said during a July conference call.When the Federal Trade Commission approved the deal last week, it required Teva to sell off 79 generic drugs to 11 rival firms, the largest drug divestiture order in an FTC pharmaceutical merger and acquisition case, the commission said in a statement.Teva is reporting its second quarter earnings Thursday morning, followed by a conference call that will allow questions on the divestitures.Analysts forecast Teva’s second quarter revenue to be $4.92 billion and profits $1.18 billion.Source: http://www.usatoday.com/
