Teva Pharmaceutical Industries Ltd agreed to buy Ratiopharm GmbH for ¤3.63 billion ($5 billion), ending a nine-month battle for Germany’s second- biggest maker of generic medicines.
Petah Tikva, Israel-based Teva beat Pfizer Inc and Actavis Group hf, which also competed in the auction, according to people with knowledge of the situation who declined to be named before a deal was announced.
The acquisition is Teva’s biggest since buying Barr Pharmaceuticals Inc for $7.4 billion in 2008. Ratiopharm will give the Israeli drugmaker a top spot in the $8.6 billion German market for copied drugs, the world’s second-largest after the US, according to Norwalk, Connecticut-based IMS Health Inc. Teva will be paying about 2.2 times 2009 sales, more than the 1.5 times multiple Cephalon Inc agreed to pay for Ratiopharm’s Swiss affiliate Mepha Gruppe last month.
“If you’re number one in the world, you can’t afford not be in Germany,” said Gilad Sarig, a Tel Aviv-based analyst for Bank Hapoalim. “They were looking for this opportunity for the last three or four years.”
Teva, the biggest generic-drug maker, rose as much as 2.5 per cent, the most since February 23, in Tel Aviv trading. The shares gained 4 shekels, or 1.8 per cent, to 228.5 shekels as of 1:36 pm.
“It’s the last major piece in the jigsaw for Teva in Europe,” said Frances Cloud, an independent analyst in London, in an interview before the agreement was announced. “It will put them comfortably in the frame to deliver their 2015 targets for Europe.”
Ratiopharm, based in Ulm, is holding a press conference at 2 pm local time in Cologne today.
Takeovers and growth outside the US, Teva’s largest market, are part of Chief Executive Officer Shlomo Yanai’s goal to more than double annual revenue to $31 billion by 2015 as rising health-care costs push patients and policy makers toward lower-priced copied drugs. Teva gets less than 25 per cent of its sales in Europe.
The Israeli company, which is the world’s largest maker of generic drugs, is targeting $6.8 billion in net income five years from now, Yanai told analysts in New York in January. Teva will lose $1 billion in revenue by then as its top-selling product, the multiple sclerosis drug Copaxone, faces competition.
Ratiopharm was put up for sale in June as owner Ludwig Merckle sought funds to repay debt amassed by his father Adolf Merckle, Ratiopharm’s founder, who committed suicide in January 2009 after making wrong-way bets on the stock market. The Merckles also sold Mepha.
The German company reported ¤307 million in earnings before interest, tax, depreciation and amortization last year on ¤1.6 billion in revenue.
The takeover catapults Teva into the top three generic-drug makers in Germany, alongside Novartis AG’s Hexal unit and Stada Arzneimittel AG. The deal also gives it 3 of the top 10 generic products by volume in the German retail drug market and 5 of the top 10 generic drugs sold to hospitals, according to data from IMS Health. The Israeli drugmaker up to now had none of the top generics in Germany.
