Teva to buy Ratiopharm for €3.6 billion
pharmafile | March 18, 2010 | News story | Sales and Marketing | Ratiopharm, Teva
Teva has secured the acquisition of German generics business Ratiopharm with a last minute bid of 3.62 billion euros.
Teva is already the world’s biggest generics company and a merger with Ratiopharm, the sixth largest generics company in the world, will only increase its dominance.
Subject to regulatory approval, the merger will create a company with combined 2009 revenues of $16.2 billion, giving it a turnover as big as mid-sized R&D-based pharma companies.
The news is a blow to Pfizer, which had sought to buy the business in order to make it a much bigger player in the increasingly important generics sector. Another major generics firm, Actavis, had also been in the running but also lost out to Teva, which has a history of making major acquisitions.
Adding Ratiopharm to its group will help Teva’s European business in particular, increasing its sales from $3.3 billion in 2009 to joint pro forma sales of $5.2 billion.
Shlomo Yanai, Teva’s president and chief executive, said: “This is an important acquisition for Teva. This transaction is perfectly aligned with our long-term strategy in which Europe is an important pillar and growth driver.
“Ratiopharm will provide us with the ideal platform to strengthen our leadership position in key European markets, most notably in Germany, as well as rapidly growing generic markets such as Spain, Italy and France.”
Ratiopharm’s portfolio includes 500 molecules in over 10,000 presentation forms, covering all major therapeutic areas marketed in 26 countries. The company also has expertise in biosimilars, with a number of products in advanced development and an established sales and marketing team. Ratiopharm reported worldwide 2009 revenues of 1.6 billion euros.
The combined entity will have 40,000 employees worldwide, of which 18,000 will be based in Europe. The combined entity’s German headquarters will be located in Ulm, Ratiopharm’s current headquarters.
Following the acquisition, Teva will improve its market position in Germany, the world’s second largest generic drug market valued at approximately $8.8 billion (including sales to hospitals and OTC), to become the number two player in this market.
Teva says the combination gives it a strong European presence, creating a leading market position in 10 European markets, including key markets such as the UK, Hungary, Italy, Spain, Portugal and the Netherlands. It will also have a top three ranking in 17 further countries, including Germany, Poland, France and the Czech Republic. The transaction also nearly doubles Teva’s sales in Canada.
Mr Yanai continued: “We are highly impressed by the team at Ratiopharm and thrilled to be joining forces with a company we have partnered with in the past and have long respected. Teva and Ratiopharm have similar corporate cultures and share a strategic vision which makes this combination a natural fit. Together, we will be able to realise the vision of increasing patients’ access to safe, high-quality, affordable medications even more quickly and deliver even more value to our stakeholders across the globe.”
Hans-Joachim Ziems, managing director of Ratiopharm’s pre-owner VEM Holding and manager of the bidding process, said: “The successful sale of Ratiopharm is concluded today with the combination of two great companies. We have emphasised from the beginning that the strategic concept of the integration of Ratiopharm into the acquiring company will play a critical role in the decision in addition to the purchase price.
“Now, we have succeeded in putting the company under the strategic umbrella of Teva as a prosperous unit, while taking into account the interests of the employees, of VEM and of the Merckle Group’s creditors.”
Oliver Windholz, chief executive of Ratiopharm, said: “For Ratiopharm, Teva is a natural fit, with its international focus and our shared generic vision. We are convinced that together we can gain enormous growth potential in all markets. Being a part of the Teva family will enable our management team and employees to continue to grow our business and fully materialise the great talent we have at Ratiopharm.”
The sale of Ratiopharm was made necessary by mounting debts at parent company Merckle, and whose founder Adolf Merckle committed suicide in January 2009.
Ludwig Merckle, the representative of Ratiopharm’s family owner, said: “The separation of Ratiopharm is a painful step for us as the founding family. Taking this as given, I am confident that this is a good solution. Finding the best home for Ratiopharm was a vital element in this process. I believe that joining forces with the world’s largest generic company will enable Ratiopharm to continue its path of growth and success.”
Teva says that once the deal is completed, it expects to find savings of at least $400 million (300 million euros), which should be fully realised within three years. It says the transaction is forecast to be earnings accretive within three quarters after closing, based on earnings per share.
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