Teva plans to raise bid for rival drugmaker Mylan to $42 bn

Israeli generic drug giant Teva Pharmaceutical Industries Ltd is planning to raise its bid for rival drugmaker Mylan NV by around $2 billion, Bloomberg yesterday reported, citing people familiar with the matter.

Teva, which had in April offered to pay $82 per share, may raise its bid to $86 to $88 per share, or from $40 billion to $42 billion, the report said.

In April, Teva, the world's largest generic drug maker, tabled an unsolicited offer to buy the Netherlands-based Mylan for $40 billion, a move that is likely to reshape the generic drug industry. (See: Teva Pharmaceutical offers to buy Mylan NV for $40 bn)

Mylan rejected the offer, saying it undervalued the company, and continued with its own $34 billion hostile bid for Ireland-based Perrigo Co Plc.

A successful Teva-Mylan merger would be the largest in the pharmaceutical industry this year, which has seen acquisitions taking place at a frenzied pace. In the first three months of this year, healthcare deals shot up to $95.3 billion, a 70-per cent increase compared to the same period a year ago, according to data from Thomson Reuters.

It would also be the largest acquisition in Teva's history, whose biggest deal has been the 2010 purchase of German generic drug maker Ratiopharm GmbH, for about $5 billion.

The transaction would create a company with an expanded global footprint, including leadership positions and strengthened operations, sales and R&D in attractive markets around the world.

Both companies' product offerings are highly complementary, and together, would create the broadest portfolio in the global pharmaceuticals industry, with a combined pipeline of over 400 pending ANDAs and over 80 first-to-files in the US.

Teva, which is based in Israel, stands to gain a huge tax benefit if its proposed acquisition is successful. The merger would save about $2 billion a year through a mix of cost cutting and tax savings.

The proposed merger would create a generic drug giant with annual revenues of about $27 billion and a market capitalisation of about $100 billion, which means that a combination of the two companies would draw intense scrutiny from anti-trust regulators from several countries.

Teva, a generic giant in the industry, has recently lost market share to rivals like India's Sun Pharmaceutical Industries and Vigodman, is keen to look for deals as the company's best-selling branded drug to treat multiple sclerosis, Copaxone, which accounted for $3.1 billion or nearly 20 per cent of Teva's $15.1 billion in revenue last year.

In early April, the US Food and Drugs Administration approved the first generic drug based on Copaxone, which would wipe out a third of the drug's sales by 2018, although Teva has switched its patient onto a version with longer-lasting effects.

Mylan is one of the world's leading generics and specialty pharmaceutical companies and sells its products in approximately 150 countries.

It has a portfolio of more than 1,400 generic pharmaceuticals and several brand medications. It also offers a wide range of anti-retroviral therapies, and is one of the largest active pharmaceutical ingredient manufacturers.

Last year Mylan acquired Abbott Laboratories for $5.3 billion, a move that allowed it to move its corporate headquarters to the Netherlands, although it still runs the company from Canonsburg, Pennsylvania.

The New York Exchange-listed company has a market cap of around $34.36 billion and posted net profit of $929 million in 2014 on revenues of $7.6 billion.