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PHARMACEUTICALS
Teva Pharmaceutical Industries has signed a definitive agreement to acquire generic drug rival Ivax Corp. in a cash and stock transaction worth $7.4 billion. Teva says the deal will create the world's largest generics company, with annual sales of more than $7 billion.
Israel-based Teva says that the purchase should be complete late this year or early next year. At that point, the company expects to recapture the number one position in generics that it lost two weeks ago to Novartis' Sandoz division, which completed the purchase of sister generic drugmakers Hexal and Eon Labs on July 21.
Teva Chief Executive Officer Israel Makov told a conference call for financial analysts that Teva and Ivax are "unusually" complementary organizations. Close to 90% of Teva's $4.8 billion in sales last year were in the U.S. and Europe, and most of the rest were in Israel. Miami-based Ivax, in contrast, brings a strong presence in Latin America and in Central and Eastern Europe, he said. Ivax' focus on respiratory, central nervous system, and oncology drugs complements Teva's portfolio, he added.
Of the many acquisitions Teva has considered in the past 10 years, "we have always viewed Ivax as one of the most attractive, and one of the most compelling, strategically," Makov said.
During the call, he predicted that the combination of the two firms will lead to $150 million in annual cost savings within two years. He expects to generate the savings through sales synergies, economies of scale, and broader integration of active pharmaceutical ingredient manufacturing with finished dose drug production.
Although Teva and Ivax focus on generics, both have R&D organizations charged with developing innovative pharmaceuticals. Teva, for example, launched the multiple sclerosis drug Copaxone in the U.S. in 1997, and Ivax runs the Ivax Drug Research Institute in Hungary, where the firm says multiple new drugs are in development.
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