More Videos
- The Emails Fly On GM, Ford CEO's Corporate Jets
- Merck Offering To Help Patients—Or Itself?
- GM, Ford & Chrysler CEOs Take Their Medicine
- Daschle's Dollars From Lawyers, Not Pharma
- AstraZeneca Provides Zest and Zeal For OSI Pharmaceuticals
- Novo Nordisk "Raises" Price On Treating Diabetes
- Carl Icahn: Can He Come To Amylin's Rescue?
- Merck Rolls The Dice On Januvia
- Merck's Marketing Challenge: Gardasil For Guys
- Pharma And The Financial Crisis
- Out with Cox, in with Uptick Rule
- Pops & Drops: Hewlett-Packard, JP Morgan & Air Wagoner
- Mad Money Green Week: Owens Corning
- Fast & Furious: It's All About Soup
- Web Extra: The Trade on Walmart and RIMM
- Chartology: Grossly Oversold and Favoring the Upside
- The "Armageddon" Gameplan
- What's Next for Citigroup?
- What to Expect From a Geithner-led Treasury
- Global Markets Want Catalysts For Buying This Week
- Economic Team Obama: Will It Help Settle Markets?
- American, Asian Leaders Push Free Trade To End Crisis
- Citigroup Talks, But Nothing 'Walks' To Stabilize
- Soros: More Money Needed For U.S. Bailout
- HP Earnings: How Much Will "Hurt" From Economy?
- Obama Warns On Economy: Works On Stimulus Plan
- Citigroup's Ills May Signal Market Isn't Near Bottom
- US Inflation Bonds Hit by Deflation, May Recover
Text Size 
 |
George Widman / AP The Horsham, Pa., offices of Teva Pharmaceuticals North America are shown Monday, July 25, 2005. In a deal that will create the world's largest generic drug company, Teva Pharmaceutical Industries Ltd. said Monday it is acquiring rival Ivax Corp. for about $7.4 billion (6.13 billion euros) in cash and stock. Ivax shares climbed 10 percent in morning trading. (AP Photo/George Widman) |
The price is $66.50 a share, which really isn't much a premium based on Thursday's closing price.
But it's a huge markup from where BRL's [BRL
Loading...
()
]stock was sitting earlier this week before the rumors and media reports started swirling about a deal being in the works.
Barr's Chairman and CEO Bruce Downey told me Teva's CEO Schlomo Yanai made the first move. But it didn't happen in a long-distance phone call from Tel Aviv to New Jersey. They say they were at an industry conference in Palm Beach outside some burger joint when the subject came up.
On the conference call this morning during the question and answer period, one analyst (I'd like to give him credit for his sense of humor, but I can't remember who it was and because I'm under deadline I don't have time to go back and listen to the replay) joked to Mr. Downey, "You got reimbursed for lunch in this deal." The CEO shot back, "And I can afford the next one, too."
I got to know Mr. Downey when he was fighting to win Food and Drug Administration approval of over-the-counter sales for the somewhat controversial Plan B or so-called "Morning After Pill". The social implications of its eventual behind-the-counter approval were much bigger than the financial implications for BRL.
related content |
But Mr. Downey maintained he personally believed the drug should be more easily accessible and that he was on a mission to make it happen. In the first quarter of this year, BRL took in nearly 600 million bucks. Less than a hundred million of that was from a number of proprietary products, which includes Plan B.
He also volunteered during his interview with me on CNBC this morning that during his tenure he'd been approached 12 times about doing a deal like this one. A dozen offers! Wow. Both Downey and Yanai said they think the generic drug sector will continue to consolidate. Among the American players still out there are Mylan Labs[MYL
Loading...
()
], Watson Pharmaceuticals[WPI
Loading...
()
] and King Pharmaceuticals[KG
Loading...
()
], just to name a few.
What's pushing the companies together? Yes, tens of billions of dollars worth of brand-name drugs are going generic. But there are so many generic drug companies around the world that start making the same plain-wrap version of a former blockbuster, prices and profit margins fall even more. And David Maris, who used to cover the sector at Bank of America but now works for a hedge fund, told me over the phone this morning that something new is at work, too.
The likes of Wal-Mart [
Loading...
()
]with its $4 generic drug prescriptions and CVS Caremark,[CVS
Loading...
()
] which Maris said is now responsible for 20 percent of the drugs purchased in the U.S., are driving hard bargains.
Questions? Comments?
Del.icio.us
Digg It
Data is a real-time snapshot *Data is delayed at least 15 minutes