Mylan pays $6.7 bn to buy Merck Generics

Ending months long speculations on the chances of Indian companies in the bidding race for the world's third largest generic drug business, US-based Mylan Laboratories acquired the global assets of the generic arm of Merck AG for euro 4.9 billion ($6.7 billion) in an all-cash transaction on Sunday.

While the acquisition is to give Mylan a global footprint, its recently acquired Indian arm, Hyderabad-based Matrix Laboratories, is set to see a huge jump in its business due to the additional raw material (bulk drug) supply that would be needed for the merged entity.

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

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

Robert J Coury, Mylan's Vice-Chairman and Chief Executive Officer, commented: "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.