4 Companies Are Eyeing Teva Pharmaceutical Industries Ltd (ADR) (TEVA)’s Generic Portfolio


Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) is compelled to divest some of the generic products in the United States. The company is working for approval of the antitrust regulator for its acquisition of the generic business of Allergan PLC (NYSE:AGN). As a result, three companies from India namely Glenmark Pharmaceuticals Ltd., Cipla Ltd., and Sun Pharmaceutical Industries Ltd and one Swiss-based Novartis AG (ADR) (NYSE:NVS)’s Sandoz are competing to grab the portfolio. In all, there are about thirty firms trying to grab the generic products portfolio from the Israeli firm.

Second-Round Bids Are Due

Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) appears to be waiting for the second-round of bids that is due this week. Bloomberg reports that the sale could generate an amount between $500 and $800 million. There are 35 overlapping generic drug products in the form of capsules, oral solids, hormones, and soft gels catering to the United States market.

While it would not have been a surprise to see American firms trying to get their share in generic business, it might have been a bit of surprise to see that Glenmark Pharmaceuticals Ltd., Cipla Ltd., and Sun Pharmaceutical Industries Ltd entering the fray. It was a rare occurrence that Indian firms were bidding the business unit in the United States compared to the American firms buying Indian outfits.

Gaining A Strong Foothold

If Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) acquired Allergan PLC (NYSE:AGN)’s generic business for $40.5 billion, it was because the company was keen to have a strong foothold in the America. That is partly because the FDA has increased its scrutiny when it comes to manufacturers of foreign nations. Therefore, to boost the presence in the biggest pharmaceutical market, foreign companies have left with little alternatives but to look for acquisition of portfolios or drugs if not the company as a whole.

That is also a reason Novartis AG (ADR) (NYSE:NVS) jumped into the bidding war to grab the generic drugs portfolio from the Italian firm. The Swiss firm is also looking for more acquisitions apart from licensing agreements. Its CEO, Joe Jimenez, said that it included its Sandoz unit too. Only last month, Novartis struck a deal to buy Admune Therapeutics LLC. Indian companies refused to confirm or deny any developments in respect of acquiring Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA)’s generic drug portfolio.

Generic Drugs Attract More Attention

The Israel firm would not have been selling the generic portfolio but for the need to receive approval of the antitrust regulator. That is partly because of the better margins expected from the segment. There are other companies fighting for increased space in the generic segment. For instance, Mylan NV (NASDAQ:MYL) was keen to acquire Perrigo Company plc Ordinary Shares (NYSE:PRGO) for $26 billion. However, the unsolicited offer was turned down by the company as only 40% of the shareholders have tendered their shares in response to Mylan’s offer. The increased competition has also boosted the valuation of generic drug units.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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