Teva Pharmaceutical Industries today offered to buy Mylan for nearly $40 billion in cash and stock—more than $11 billion above Mylan’s offer for Perrigo two weeks ago, and potentially the year’s largest biopharma acquisition deal.
A Teva-Mylan combination would generate more than $27 billion in combined annual revenues, and create the world’s largest generic drug company with several successful branded specialty and biologic products as well. These include Teva’s MS treatment Copaxone, which generated $4.237 billion in revenues last year; and Mylan’s EpiPen®(epinephrine) Auto-Injector for life-threatening allergic reactions, the company’s first product to generate more than $1 billion in annual net sales in 2014.
Both products face generic competition: Last week the FDA approved a generic Copaxone to be marketed by Novartis’ Sandoz unit and Momenta Pharmaceuticals, while Teva is among companies interested in marketing generic versions of EpiPen.
“We have long respected Mylan’s business, and we are confident that Mylan’s Board of Directors and stockholders will agree that our proposal represents a significantly more attractive alternative for Mylan and its stockholders than Mylan’s proposed acquisition of Perrigo,” Erez Vigodman, Teva’s president and CEO, said in a statement. “The combination of Teva and Mylan is a truly unique opportunity to build upon both companies' solid foundations. Bringing the two together will create a much stronger, more efficient platform to achieve our goals.”
Teva said it could squeeze an estimated $2 billion in year in cost cuts or “synergies” and tax savings by acquiring Mylan, which has its corporate headquarters in Potters Bar, England, and an operating HQ in Canonsburg, PA., but which redomiciled in the Netherlands after acquiring Abbott’s non-U.S. generic drugs business, in a deal announced last year and completed in February.
Teva proposed buying Mylan through an approximately 50-50 mix of cash and stock, with the would-be buyer offering $82 for shares of Mylan—20% above the closing share price of $68.05 on Monday.
In disclosing its offer, Teva emphasized that its offer represented a 37.7% premium to Mylan’s share price on April 7, the last day of trading before Mylan disclosed its unsolicited proposal for Perrigo; and a 48.3% premium to Mylan’s share price on March 10, the last day of trading before speculation arose of a deal between Teva and Mylan.
Mylan rebuffed Teva last week: “We have studied the potential combination of Mylan and Teva for some time and we believe it is clear that such a combination is without sound industrial logic or cultural fit,” Mylan’s Executive Chairman Robert J. Coury stated on April 17. “Further, there would be significant overlap in the companies' businesses and we believe that it is unlikely that any such combination could obtain anti-trust regulatory clearances.”
The development of branded drugs has helped both Teva and Mylan cushion the impact of fewer blockbuster drugs for which generics could be launched upon expirations of patent exclusivity. Generics-oriented drug companies also face increased competition in Asia and pressures to contain prices from several Asian and European nations.
Teva last October also narrowed its therapeutic areas of focus by retreating from oncology and women’s health treatments as core therapeutic areas, while retaining its focus on central nervous system (including multiple sclerosis, neurodegenerative diseases, and pain) and respiratory (including asthma and chronic obstructive pulmonary disease) treatments.