Teva Pharmaceutical Industries purchases Allergan's generics business for $40.5-billion. This may help generic-drug makers to acquire products that may be divested as a part of the antitrust procedures in the US and fill their portfolio gaps.
Teva said that the pro-forma revenue of the combined entity for 2016 is expected to be about $26 billion and combined EBITDA about $9.5 billion.
Allergan's generics had sales of $6.75 billion last year. An analyst at a global investments group said he expects a few overlaps in the product portfolios of the two sides and leading Indian firms may be keen on seizing those opportunities for comparatively lower valuations. "Oral contraceptives could be one of the few areas where the two drug makers may need to sell products and that is where Indian companies may evince interest," the expert said.
Whenever a large acquisition like this happens, there will be an overlap of products that can be put up for sale and that can be an opportunity for Indian firms to grow their business, said Sujay Shetty, head of lifesciences practice at consultancy firm PwC. India's homegrown biggies are keeping a close watch on what is seen as one of the biggest deals in the generic industry that could alter the market dynamics in the US, the biggest market.
"Fundamentally, competition is getting more consolidated in the US market.There might be a few opportunities coming up for Indian companies where there might be some products from the acquisition that might be put on the block," said GV Prasad, vice-chairman and chief executive of Dr Reddy's Laboratories. In a statement announcing the deal, Teva president and CEO Erez Vigodman, however, asserted that the two firms have a highly complementary portfolio and can provide Teva with high-quality growth and earnings visibility.
Analysts see the deal to lead to a clear polarization of the generic industry with the very top portion led by Teva, Mylan and Sandoz, followed by leading Indian firms such as Sun Pharmaceutical Industries, Dr Reddy's and Zydus Cadila. "This could open up even more M&A opportunities," said pharma expert. However, he cautioned that with larger drug makers wielding more bargaining power on supplies of generic products, the move may put pressure on Indian firms in the medium term.
In India, by buying the Allergan generics business, Teva will get a bigger sourcing and research and manufacturing base. While the company already has an R&D centre in Noida and a manufacturing base in Indore, apart from its multiple sourcing alliances with Indian companies, the deal will bring it a full-fledged manufacturing site in Goa, an API (active pharmaceutical ingredient) development centre at Ambarnath near Mumbai and two other units in Bengaluru and Chennai.