Teva Bolsters Position in Japan - Analyst Blog
May 16 2011 - 12:58PM
Zacks
Teva Pharmaceutical Industries Ltd. (TEVA)
recently announced its intention to acquire 57% of the shares of
privately-held Japanese company Taiyo Pharmaceutical Industry Co.
Ltd. for $460 million. Teva said that it also intends to extend an
offer for the remaining shares at Taiyo. The deal, which is
scheduled to close in the third quarter, gives Taiyo an enterprise
value of $1.3 billion.
Deal to Strengthen Teva’s Presence in Japan
The deal is in-line with Teva’s strategy of becoming a major
player in the Japanese generics market. Taiyo, which posted sales
of $530 million in 2010, is the third largest generic pharma
company in Japan. Taiyo’s portfolio consists of more than 550
generic drugs.
With this deal, Teva expects to deliver sales of $1 billion in
Japan ahead of its 2015 target. The Japanese market, which is the
second largest pharma market in the world with sales of $96 billion
in 2010, has a relatively low rate of generic penetration.
With the Japanese government working on increasing generic
penetration from 23% to 30% by 2012, the market represents huge
commercial potential for generic players like Teva.
Teva expects the deal to be accretive to GAAP earnings within
four quarters after closing. The company will use available funds
and bank debt to finance the deal.
Second Deal in May
Teva has been pretty active on the deal-making front over the
past few quarters. So far in 2011, the company has struck several
deals, including the upcoming acquisition of biopharma company,
Cephalon, Inc. (CEPH).
The Cephalon deal, which is scheduled to close in the third
quarter of 2011, will not only strengthen Teva’s pipeline, it
should also help the company achieve its goal of increasing its
branded revenues from $4.6 billion in 2010 to more than $9 billion
in 2015.
We currently have a Neutral recommendation on Teva, which
carries a Zacks #3 Rank (short-term Hold rating).
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