Teva in talks to buy Allergan's generic-drug unit for $45 bn: report

Israeli generic drug giant maker Teva Pharmaceutical Industries Ltd is in talks to buy the generic-drug business of Allergan Plc for about $45 billion, The Wall Street Journal  reported over the weekend, citing people familiar with the matter.

The Allergan generic-drug business would be spun off and combined with Teva, and a deal could be announced today, the report said.

A deal with Allergan would indicate that Teva could be considering abandoning its plan to buy Mylan NV after the Netherlands-based company rejected its $40-billion takeover offer and continues with its pursuit of Irish drug maker Perrigo Co.

Allergan, based in Dublin and with operating headquarters in New Jersey, was created in late 2014 through the $66-billion acquisition of US Botox maker Allergan Inc by Actavis Plc (See: Actavis in talks to buy US Botox maker Allergan for around $60 billion: report),  which last month rebranded the combined company as Allergan and now has a market cap of $121 billion.

Prior to the deal, Actavis was the world's third-largest generic drug maker behind Teva and India's Sun Pharmaceuticals. It is also the third largest generic manufacturer in the US where it continues to operate as Actavis.

Post merger, Allergan has one of the broadest product portfolios and strongest pipelines in the generics industry. It has more than 750 molecules in 1,700 dosage combinations marketed globally through operations in more than 60 countries and around 40 per cent of its $7 billion generic drug revenue comes from outside the US.

The Dublin-based company is in leading market positions in key established commercial markets and emerging markets in Central and Eastern Europe, Russia, the UK, France and Australia.

It has 30 manufacturing and distribution facilities around the world, including in China, India, Indonesia and Singapore.

Established in Jerusalem 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 $60 billion.

Since it is based in Israel, Teva stands to gain huge tax benefits if the Allergen generic unit deal succeeds, but the merger could draw intense scrutiny from anti-trust regulators from several countries.

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

Teva CEO, Erez Vigodman is keen for acquisitions 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, lost patent protection last month.

Last month the US Food and Drugs Administration approved the first generic version of 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.