Israeli Drugmaker Teva Purchases Ratiopharm

The combined entity will hold the leading market position in 10 European markets.

Teva made a major stride into Europe on March 18 with $5 billion purchase of Ratiopharm, which is Germany's second largest generics producer and number six worldwide.

The 3.6-billion-euro acquisition will "position Teva as the leading generic pharmaceutical company in Europe," it said, boosting sales there to $5.2 billion from $3.3 billion at present.

Teva is already the world number one in generic medicines, but less than a quarter of its $14 billion in annual sales comes from Europe. Germany is the world's second largest market in this area, worth around $8.8 billion, Teva said.

"This is an important acquisition for Teva. This transaction is perfectly aligned with our long-term strategy in which Europe is an important pillar and growth driver," Teva chief executive Shlomo Yanai said.

"Ratiopharm will provide us with the ideal platform to strengthen our leadership position in key European markets, most notably in Germany, as well as rapidly growing generic markets such as Spain, Italy and France."

It is the biggest takeover in the generic industry since Teva itself bought U.S.-based Barr Pharmaceuticals for $7.5 billion in 2008.

Ratiopharm belonged to German tycoon Adolf Merckle, who threw himself under a train in January 2009 as the global financial crisis and disastrous stock market bets pushed his business empire onto the rocks. The 74-year-old's VEM holding company controlled Ratiopharm, building materials giant HeidelbergCement and one of Europe's biggest wholesale drug distributors, Phoenix.

Teva reportedly saw off competition from Pfizer and from Iceland's Actavis to acquire Ratiopharm. Pfizer baulked at the high asking price and may now turn its attention to Germany's Stada Arzneimittel, reports said.

The combined entity will hold the leading market position in 10 European markets, including Britain, Italy, Spain and the Netherlands as well as a top three ranking in 17 countries including Germany, Poland and France. In addition, the transaction will nearly double Teva's sales in Canada.

Teva expects synergies of at least $400 million within three years and the deal will begin to boost Teva's profits within nine months of the transaction being completed.

Copyright Agence France-Presse, 2010

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