US antitrust regulator approves Teva-Allergan $40.5 bn generic deal

28 Jul 2016

US antitrust regulators yesterday approved Teva Pharmaceutical Industries Ltd proposed acquisition of Allergan Plc's generics business, after the Israeli generic drug giant agreed to divest 79 generic drugs to rival firms.

In July last year, Teva, the world's largest generic drug maker, struck a deal to buy Ireland-based Allergan's generics business for $40.5 billion. (See: Teva in $40.5-bn pact to buy Allergan's generics, ends Mylan bid) The US Federal Trade Commission (FTC) yesterday said that Teva has agreed to sell the rights and assets related to 79 pharmaceutical products to eleven firms to settle charges that its proposed deal would be anticompetitive.

The divested products include anesthetics, antibiotics, weight loss drugs, oral contraceptives, and treatments for a wide variety of diseases and conditions, including ADHD, allergies, arthritis, cancers, diabetes, high blood pressure, high cholesterol, mental illnesses, opioid dependence, pain, Parkinson's disease, and respiratory, skin and sleep disorders.

The acquirers of the divested products are Mayne Pharma Group, Impax Laboratories, Dr. Reddy's Laboratories, Sagent Pharmaceuticals, Cipla, Zydus Worldwide, Mikah Pharma, Perrigo Pharma, Aurobindo Pharma, Prasco and 3M Company.

In addition to the product divestitures, to address the anticompetitive effects likely to arise in markets for 15 pharmaceutical products where Teva supplies active pharmaceutical ingredients to current or future Allergan competitors, the FTC order additionally requires Teva to offer these existing API customers the option of entering into long-term API supply contracts.

Welcoming the approval, the Jerusalem-based company said that post closing, Teva will have approximately 338 product registrations pending FDA approval and will hold the leading position in first-to-file opportunities with approximately 115 pending ANDAs in the US.

Additionally, Teva will have a commercial presence across 80 markets, including a top-three leadership position in over 40 markets.

Teva also said that the transaction is expected to generate $1.4 billion in operational and tax synergies, and the combined company is expected to generate more than $25 billion of free cash flow from deal by the end of 2019.

Founded in 1901 by Chaim Salomon, Moshe Levin and Yitschak Elstein, Teva started out as a small wholesaler of imported drugs. The company has since come a long way to become the biggest corporation in Israel and currently has a market cap of $48.9 billion.

Though a generic giant in the industry, Teva has recently lost market share to rivals like India's Sun Pharmaceutical Industries.

Erez Vigodman has been looking for acquisitions after the patent expiry last year of its best-selling branded drug for multiple sclerosis, Copaxone, which accounted for $3.1 billion or nearly 20 per cent of its $15.1 billion in revenue last year.

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