Last week, Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) bid to acquire its competitor, Mylan Laboratories, in a giant deal amounting to over $40 billion. Mylan is playing hard to get and has since rejected Teva's bid. The ball is now in Teva's court to up the bid. This deal, which would be Teva's largest ever acquisition, is in Teva's traditional generic business. Teva has been the world's leading generic drug company in recent years. According to its revenue forecast for 2015, however, if its acquisition of Mylan does not go through, Teva stands to lose its leading position in revenue to Sandoz, the generic arm of Novartis.
A presentation published by Teva following its offer to purchase for Mylan included a graph of expected revenue from the company's generic business in 2015. Novartis expected sales this year total $53 billion, compared with a combined $29 billion for Teva and Mylan. These figures, however, include non-generic sales, which account for Novartis's leading position as one of the world's largest pharmaceutical companies.
Even if only the forecast for generic business is included, however, Novartis (through Sandoz) will outperform Teva this year (excluding the possible acquisition of Mylan). Teva's generic revenue totaled $9.8 billion in 2014, while Sandoz's neared $9.6 billion. While Teva's 2015 revenue forecast for its generic business is $9.1-9.5 billion, Sandoz expects growth of about 5%, which would increase its revenue to $10 billion, $500 million more than the upper range of Teva's forecast.
The acquisition of Mylan is designed to consolidate Teva's leading status in the generic market. The aggregate revenue of Teva and Mylan totaled $28 billion in 2014, which, if combined, would put the merged company among the top 10 pharmaceutical companies in the world in terms of revenue, not just among the generic companies.
Published by Globes [online], Israel business news - www.globes-online.com - on April 27, 2015
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