Teva to buy Taiyo stake for $460 million, bid for rest

TOKYO: Teva Pharmaceutical Industries Ltd, the world's biggest generic-drug maker, agreed to buy 57% of Taiyo Pharmaceutical Industry Co Ltd. for $460 million and bid for the rest to take advantage of Japan's push to broaden the use of copycat medicines.
The transaction values closely held Taiyo of Nagoya, Japan's third-largest maker of generics, at $1.3 billion, Petah Tikva, Israel-based Teva said in a statement on Monday. The company had revenue of $530 million last year and has more than 550 copied drugs, including injectable ones used in hospitals, according to the release.

It's the second transaction valued over $1 billion for Teva this month. The company on May 2 swooped in to outbid Valeant Pharmaceuticals International Inc. for Cephalon Inc. in a $6.2 billion deal.

Israel's largest company is looking for new engines of growth as its multiple sclerosis drug Copaxone, which brought in 22% of sales last quarter, faces competition.

"This deal should bring Teva to be a leading player in the generic market in Japan," said Natali Gotlieb, an analyst at Israel Brokerage & Investments Ltd. in Tel Aviv. She estimates Teva ranks about No. 6 there.

Teva rose 1% to 174.20 shekels at 10:24 a.m. in Tel Aviv trading. The company's American depositary receipts closed at $49.67 on the Nasdaq Stock Market on Friday.

The acquisition will help Teva reach its goal of getting $1 billion in sales from Japan sooner than 2015, Chief Executive Officer Shlomo Yanai said.

PUSH FOR GENERICS

"Teva has a large interest in the Japanese market, because the government there plans to increase generic use in coming years," Gotlieb said.

Japan is the world's second-biggest pharmaceutical market after the US, valued at $96 billion last year, with only about 23% of that coming from generics, according to the statement. The government aims to increase the use of generics to 30% by 2012.

To take advantage of the generics push, Teva also formed a joint venture with Kowa Co. in September 2008. The company, Teva-Kowa Pharma Co., bought a stake in Taisho Pharmaceutical Industries Ltd. last year.

The transaction announced today will be funded through a combination of cash and bank debt and Teva said it expects to complete the deal by the end of the third quarter. The acquisition will bolster Teva's earnings within four quarters after closing, the Israeli company said in the statement. The price Teva is paying, at about 2.5 times sales, looks to be "fair," according to Gotlieb.