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28 Jul 2015

Teva to acquire Allergan Generics for $40.5 Bn

Teva Pharmaceutical Industries Ltd. agreed to buy Allergan PLC’s generics unit for $40.5 billion in cash and stock, in a deal that will vault the Israeli company into the top ranks of global drug makers.

Top 5 company by generic drug sales

Teva $ 9.1 Bn 
Novartis $ 8.5 Bn
Allergan $ 6.6 Bn 
Mylan $ 6.5 Bn 
Sun Pharmaceutical – $ 6.5 Bn 

This will be the deal of consolidation in the drug industry, which combines Teva, the world’s largest generic-drug company by sales, with the third-largest competitor in the market.

Teva Market Size Present Vs. After Acquisition

Present12%
After Acquisition20%

Teva had $9.1 billion in generic-drug sales, almost about 12% of the world market. The company said it already accounts for one in six drug prescriptions in the U.S. But much of its business is in no-name generic medicines sold at lower prices. Nearly half of Teva’s $20.3 billion in sales last year were from the off-patent generic copies of drugs.

By adding Allergan’s business, which reported $6.6 billion in sales last year, Teva would have revenue significantly greater than that of better-known, branded-drug companies such as Cialis maker Eli Lilly & Co., which reported $19.6 billion in sales last year.

The acquisition will give Teva increased scale in the hotly competitive generic-drug market, and an opportunity to pursue further cost reductions that could help it cope with the end of a wave of big patent expirations.

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