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| Teva CEO Erez Vigodman |
A combined
company would create a generics superpower, Teva figures, with a pipeline of
more than 400 pending generic drug applications at the FDA. That includes more
than 80 first-to-files, which can give one drugmaker a lock on generic sales
for 6 months after a patent expiration.
Together, Teva
and Mylan would also boast advanced manufacturing technologies that deliver
hard-to-produce drug formulas, not to mention the globe's leading API division,
the Israeli company says.
And don't forget
specialty drugs: Between them, the two drugmakers could show off a $10 billion
business in that department, with leading positions in multiple sclerosis,
respiratory, pain, allergy meds and other areas.
All told, Teva
believes it would be looking at mid-single-digit top-line growth, more than $30
billion in revenue, and EBITDA exceeding $10 billion come 2016--assuming Mylan
agrees to tango. On top of that, Teva says it can squeeze out $2 billion in
savings on annual costs and taxes, most of it within three years.
Those savings
would be possible partly because the companies' businesses overlap
significantly. A boon for cutting costs, but as some analysts--and Mylan
Chairman Robert Coury--have pointed out, that overlap might thwart regulatory
clearance for a deal.
Not so, Teva
says: It "carefully studied" the regulatory aspects of a tie-up, and
it's confident it can structure a transaction to meet regulators' approval.
For Teva, it's
the big jump into M&A action that industry watchers have been waiting for
ever since Vigodman took the helm early last year. With generic challengers
champing at the bit to get a shot at lead product Copaxone, Teva is in need of
some top-line assistance. And it has promised a renewed focus on the generics
business that was once its bread and butter.
But Mylan will
be a tough sell. The company recently set in motion a poison pill
plan--designed to block unwanted takeovers--and Friday, Coury unequivocally
opposed a Teva merger. In a statement, Coury said a match between Teva and
Mylan "is without sound industrial logic or cultural fit." Mylan is
committed to a standalone path, he said--which includes pursuing its $29
billion bid for Ireland's Perrigo ($PRGO).
Vigodman doesn't
see it that way. "[A] combination of Teva and Mylan is a much more
attractive and value-creating alternative for Mylan and its stockholders than Mylan's
proposed acquisition of Perrigo," he wrote in a Tuesday letter to Coury.
As for the
cultural differences Coury mentioned? Not a problem, from where Vigodman's
standing.
"Both Teva
and Mylan have achieved their respective goals through innovation, vision and a
commitment to quality," the CEO said in a Tuesday statement. "Mylan's
business is a natural fit with our own and is highly complementary to it--and
bringing together our two companies would not only deliver the greatest value
for our financial stakeholders, but also enable us to better serve patients,
customers and healthcare systems throughout the world."
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