Teva buys out Ratiopharm for €3.63 bn; climbs on to list of top-notch drug firms

Israeli drug manufacturer Teva Pharmaceutical Industries Ltd will acquire Ratiopharm Group International for €3.63 billion – $4.97 billion in dollar terms – to hop on to one of the top most slots in Europe’s generic drug scenario.

By all counts, the new acquisition would be rated as the largest takeover in the generic drug market since Teva bought US-based Barr Pharmaceuticals Inc for $7.46 billion in 2008. Seen as a deal that perfectly aligns with Teva’s long-term strategy in the pharma arena, the acquisition would be completed by the end of 2010. The industry sees synergies of at least $400 million, expected to be realized over a period of three years.

The takeover comes as a sale by Germany’s Merckle family through its investment vehicle VEM Vermoegensverwaltung GmbH. The sale of Ratiopharm by VEM has been made imperative owing to the huge burden if debts attributed to founder Adolf Merckle, who incidentally killed himself last year after having had to see millions of euros erode as a result of stock-market liabilities. With the deal now having come up, Teva employees, a good number of them are on the brink of losing their jobs.

It may be noted that US pharma giant Pfizer Inc had earlier entered the fray to pocket Ratiopharm but then, later on, decided not to risk close to €3 billion by way of the deal.

Teva, in fact, has made a habit of sealing takeovers by the dozen. The company, which is Israel’s largest and the world’s biggest maker of generic drugs, had been a major presence in business headlines by way of a slew of acquisitions it had been involved in. For instance, the company had in December 2008, bought out Barr Pharmaceuticals in the US and its European subsidiary Pliva for $7.5 billion. This had gone down in history as Teva’s largest acquisition. Besides this, Teva had pocketed US-based IVAX Corp in 2006 for $7.4 billion. Other acquisitions by Teva include the deal that made Sicor its wholly owned subsidiary in January 2004, the 2000 takeover of Canadian privately held company Novopharm and the August 1999 acquisition of Massachusetts-based Copley Pharmaceutical Inc for $220 million. Who’s next on the radar, Teva?