Actavis agrees to sell some generic drugs for regulator nod on Warner Chilcott deal

The US regulator yesterday approved the $5-billion acquisition of Irish specialty pharmaceutical company Warner Chilcott Plc by US drugmaker Actavis Inc, after Actavis agreed to sell all rights and assets related to three oral contraceptives and an osteoporosis treatment.

The agreement settles claims by the US Federal Trade Commission (FTC), which had argued that the takeover would hurt competition and probably lead to higher prices for consumers.

Under the terms of the settlement, New Jersey-based Actavis will sell rights and assets related to generic versions of oral contraceptives Femcon FE, Loestrin 24 FE, oral contraceptives Lo Loestrin FE and Atelvia, and osteoporosis drug Atelvia.

The proposed consent order requires Actavis to sell the drugs to Amneal Pharmaceuticals and also enter into an agreement to supply generic versions of Femcon FE and Loestrin 24 FE to Amneal for two years, after which Amneal may extend the agreement for two more years. 

With 65 other generic products already on the market, the FTC believes that Amneal has the expertise to replicate the competition for the four drugs that otherwise would have been lost through the proposed acquisition.

In May, Actavis, the largest generic drug maker in the US by market value, agreed to buy Warner Chilcott for $5 billion, and assume debt of $3.5 billion. (See: Actavis to acquire Irish specialty drug maker Warner Chilcott for $5 bn)

In April 2012, Ireland-based Warner Chilcott, which makes women's healthcare, dermatology, gastroenterology and urology products, had announced plans to explore strategic options, including a possible sale and had hired Goldman Sachs Group as its financial adviser.

The Ireland-based company received buyout offers from three potential suitors, including both private equity and industry buyers, but their offers did not meet with its expectations of around $25 a share.

Warner Chilcott, which makes a range of products that include well-known oral contraceptives Loestrin 24 FE, Femcon FE and Ovcon, was taken private in a $2.1-billion deal in 2005 by a consortium that included Thomas Lee Partners, Bain Capital, JPMorgan Chase & Co and Credit Suisse.

It returned as a public company in 2007, but Credit Suisse sold its stake in 2010, while the others still own about 30 per cent.

Since being spun out of Warner-Lambert in 1996, Warner Chilcott has grown through a series of acquisitions and divestitures, from a small seller of undifferentiated products to a fully integrated pharmaceutical company with a broad portfolio of leading branded products.

Its largest acquisition was carried out in 2009, when it purchased Procter & Gamble's global prescription drug business for about $3.1 billion.

Actavis, the world's third-largest generic drugmaker was established in January after New Jersey-based Watson Pharmaceuticals acquired it for around $5.60 billion, in order to expand in Europe.

It develops, manufactures and markets generic, branded generic, legacy brands and over-the-counter (OTC) products in more than 60 countries.

With 30 manufacturing and distribution facilities around the world, including in China, India, Indonesia and Singapore, the company is ranked among top 3 in 12 global markets, top 5 in 16 global markets, and top 10 in 33 global markets.

Actavis 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 generic drug revenue comes from outside the US.

Actavis Specialty Brands, formerly known as the Global Brands business, markets more than 40 brand pharmaceutical products, primarily in the US.

It also develops and out-licenses generic pharmaceutical products outside the US through its Medis third-party business, the world's largest generic pharmaceutical out-licensing business. Medis has more than 300 customers globally, and offers a broad portfolio of more than 200 products.

Actavis, the maker of the generic version of Pfizer's blockbuster cholesterol busting drug Lipitor, has a market value of $12.9 billion and generated revenue of $5.9 billion last year.

The Warner Chilcott acquisition would make Actavis a global specialty pharmaceutical company with annual revenues of $11 billion.

The deal will expands its portfolio and pipeline in core areas of women's health and urology, while adding gastroenterology and dermatology.

The merger is expected to generate after-tax operational synergies of more than $400 million.