Big pharma deals: Mylan, Teva push on despite rejections

Suitors in the generic drug industry's big consolidation push signaled today they would keep fighting for deals, even after Perrigo rejected a sweetened offer from Mylan.
It was the second time in less than a week that Mylan raised its bid, this time to USD 35.6 billion, to merge the two into a company with USd 15 billion in annual sales.
And it was the second time Perrigo responded within hours with a flat "no," saying the offer deeply undervalued the company.
Even as that happened, Israel's generics giant Teva restated its interest in buying Mylan despite a blistering rejection from Mylan earlier this week.

Whether either of the unsolicited campaigns will result in a deal soon is anybody's guess.
But analysts say both Mylan and Perrigo are ripe for takeovers in the next five years due to pressures in the global pharmaceutical industry even if they survive the current onslaught.

"The 'who' and 'when' are extremely unclear," said Michael Waterhouse, an equity analyst at Morningstar. "I would say that eventually, a lot of these companies get bought."
Generic drug companies are under pressure to do deals now because there are fewer big-money drugs shifting to generic status compared with a few years ago, when cholesterol medication Lipitor and other blockbusters were available, Waterhouse said.

Waterhouse said the sector also views cost-cutting as a key tool for raising profits as the industry faces rising competition from suppliers in India, a trend which exerts downward pressure on drug prices.
Mylan's latest move offered a combination of cash and Mylan shares that amounts to USD 232.23 per Perrigo share, Mylan said.
That was USD 10 a share higher than its April 24 offer, according to Mylan calculations.
Mylan chief executive officer Heather Bresch said a combination with Perrigo would create "a one-of-a-kind global healthcare company" with "complementary businesses and cultures, unmatched scale in its operations and infrastructure, broad and diverse portfolio, and immense reach across distribution channels around the world."

But Perrigo said the newest offer was worth just USD 202.20 per share, based on Mylan's value on March 10 before speculation of a Teva bid for Mylan lifted its shares. That is below the USD 205 per share in Mylan's initial offer, Perrigo said.
"Today's announcement from Mylan continues to propose a price lower than the previously rejected proposal," Perrigo said.
Mylan has kept up its push even while fending off ostensibly unwanted attention from Teva, which made a USD 40.1 billion offer for it on April 21.
A merger with the Israeli firm would form a USD 28 billion company that Teva said could generate USD 2 billion in annual savings, while expanding its specialty pharmaceutical business.

After Teva renewed its interest Monday, Mylan dismissed the offer as both "grossly" low and insincere, "a mere attempt by Teva to frustrate and distract Mylan from its business plan and strategy.