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Teva Pharmaceutical Industries

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Teva Pharmaceutical Industries has come to the rescue for Cephalon and agreed an US$81.50 per share cash offer that values the latter at approximately US$6.8 billion. The transaction, which is backed by Cephalon’s Board of Directors, trumps a rival offer from Valeant Pharmaceuticals International that had valued Cephalon at US$73 per share, or US$5.7 billion. Not surprisingly, Valeant has thrown up the white flag and withdrawn its offer. Teva’s acquisition is expected to be completed in the third quarter of 2011.

According to Teva, the transaction bolsters the company’s long-term game-plan of building out its branded and specialty pharmaceuticals business through diversification and growth of the company’s product portfolio and pipeline. Teva is also convinced that here are several strategic and financial benefits to the takeover, including expanding the Israeli company’s geographical reach, and through acquiring Mepha, the largest generics company in Switzerland with a presence in Central and Eastern Europe, Africa and Latin America.

Mepha also provides Teva with a presence in high growth emerging markets. The deal looks set to diversify Teva’s portfolio of products into new therapeutic segments, particularly in the areas of CNS, and will add commercial presence in oncology and pain management. The combined company will boast over 20 branded products, with pro forma branded sales of about US$7 billion.

In addition, Cephalon’s pipeline of late-stage products looks set to boost Teva’s pipeline in key therapeutic areas including CNS, oncology and respiratory, and allows Teva to dip its toes into new areas such as pain management. The combined company will own over 30 compounds in late-stage development, including three products in filing stage. Following the takeover, Teva expects to realise annual cost synergies of at least US$500 million in the third year after the deal is completed, and also expects the purchase to immediately enhance Teva’s non-GAAP EPS.

Drug Delivery Insight Perspective: This monumental takeover seems to be borne out of Teva’s long-term focus to drive increased diversification across all of its business units, products and geographies. The combined Cephalon-Teva company’s huge product portfolio is also bound to support the latter in achieving its goal of growing its branded revenues from US$4.6 billion in 2010 to over US$9 billion in 2015.

Thanks to Espicom’s Sophie Bracken for this article.

Espicom Business Intelligence

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