Mylan Labs bags Merck's generics unit for $6.7bn

 US based Mylan Laboratories has acquired German drug major Merck AG's generic drug business for euro 4.9 billion ($6.7 billion) in an all-cash
 transaction today. The acquisition will enable Mylan to make fullest
 use of the basic bulk drug (API) manufacturing capabilities of its Indian
 arm, Matrix.

Robert J. Coury, vice chairman and chief executive officer, Mylan Labs said: "Mylan's acquisition of Merck Generics would substantially complete the execution on one of its long-term visions: to create a world class global quality generics leader. The fit between our two companies is truly outstanding. Mylan is already a leader in the US, the world's largest market, and through Matrix Laboratories controls one of the broadest API platforms in the world. Merck Generics provides us with leading positions in many of the world's other key regions. Together, we will form a powerful, diverse, robust and vertically integrated generics platform."

The acquisition has turned Mylan the third biggest global player in generics business after Israel's Teva and Swiss major Novartis's generic arm Sandoz.

"The combination of Mylan and Merck Generics will create a vertically and horizontally integrated generics and specialty pharmaceuticals leader with a diversified revenue base and a global footprint. On a pro forma basis, for calendar 2006, the combined company would have had revenues of approximately $4.2 billion, EBITDA of approximately $1 billion and approximately 10,000 employees, immediately making it among the top tier of global generic companies, with a significant presence in all of the top five global generics markets," the release issued by Mylan said.

Mylan and Merck Generics is to benefit from significant savings driven by Hyderabad based Matrix's low cost, high quality API (bulk drug) capacity and the benefits of manufacturing high product volumes for multiple markets around the world.

In 2007, Mylan completed its acquisition of a 71.5% stake in Matrix, the second largest API manufacturer globally, with more than 165 APIs in the marketplace or under development.

The bid for Merck Generic was keenly fought with all major generic players showing interest in its global assets. Ranbaxy was the only Indian company among global players like Actavis and Teva that had publically expressed its interest in a direct bid. Several other Indian companies like Torrent, Aurobindo and Cipla had also some interest in the bid as they had agreed for technical collaboration with private equity consortiums who had made futile attempts to acquire Merck's generic business.