Barr offers $2.5 bln for Pliva, trumping Actavis
Generic drugs are less profitable than branded products, and so companies such as Petah Tikva, Teva and Basel, Novartis are making purchases to increase the scale and reach of their operation. Teva bought Miami-based Ivax Corp. for $7.4 billion this year after Novartis purchased Germany's Hexal AG and US affiliate Eon Labs last year. Insurers and government health program are trying to restrain costs by switching patients to generic drugs. The global market for generic drugs, now worth $58 billion, may grow to $100 billion in sales by 2010, according to UK market researcher Datamonitor. A union of Barr and Pliva would create a company with $2.5 billion in annual revenue and about 170 generic products in development. It would also have about 60 applications at the US Food and Drug Administration, Barr said in a statement. Pliva has US approval to sell generic versions of Pfizer Inc.'s Zithromax antibiotic and Bristol-Myers Squibb Co.'s Coumadin clot medicine.
Actavis touched off the bidding for Pliva last March with an unsolicited bid of $1.6 billion, later raised to $1.85 billion. Pliva rejected both bids as too low and eventually endorsed a rival offer from Woodcliff Lake, New Jersey-based Barr on June 27. Actavis responded by buying shares in Pliva, amassing a 20.8% stake in the company by June 30. Barr has picked up 4,522 shares, less than 1% of the company, since its acceptance period began Aug. 18, according to the Croatian Central Depositary Agency's Web site. Wessman said Pliva had been underperforming under its CEO, Zeljko Covic. The company lost $75.1 million in 2005 as Pliva abandoned its unprofitable proprietary drugmaking business. By integrating Actavis's operations with Pliva's, the combined company stands to reap cost savings of € 50 million in 2007 and 100 million euros in 2008 and thereafter, Actavis CEO Robert Wessman said in a Sept. 6 interview with Bloomberg.
Barr is also committed to winning the bid, CEO Bruce Downey said in a statement Friday. „The combination of our two companies will be additive and create growth,” he said. „We will recognize the long-term value of this combination through investment and expansion, not one-time synergies resulting from the contraction of duplicative assets.” Pliva's preference for Barr may be based on the chance that Barr would keep Covic, said Ljubo Jurcic, an independent member of Croatia's parliament and former Economy Minister. Should Actavis win, Covic probably will not remain as CEO, Wessman said in a Sept. 1 conference call. „Actavis opened people's eyes to the fact that Covic is not a good manager,” Jurcic said. „Pliva was no longer the hunter, but the target.” (Bloomberg)
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