Skip navigation
MOST POPULAR RELATED TAGS
  • TOPICS
  • SECTORS
  • COMPANIES
Pharmas Market Video Gallery
Diabetes is a global epidemic that presents an estimated $25 billion drug and device market and some predict that number...
The FDA is holding meetings into big pharma's possible use of social media to sell their products. CNBC's Mike Huckman h...
PHARMA WATCH LIST
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...

SPECIAL REPORT


Current DateTime: 02:13:21 16 Nov 2009
LinksList Documentid: 32984624

PHARMA'S MARKET VIDEO

» More

Current DateTime: 02:13:21 16 Nov 2009
LinksList Documentid: 31171988
Expiration DateTime: 11/16/2009 2:15:08 AM

RSS FEED

» Help

Current DateTime: 02:13:21 16 Nov 2009
LinksList Documentid: 31171995
powered by digg

Pharma's Market

Text Size

TEVA PHARMACEUTICAL
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)

Israel's Teva Pharmaceuticals, the biggest generic drug company in the world, in what became one of the world's worst-kept secrets this week is buying the American Barr Pharmaceuticals.

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.

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? 

© 2009 CNBC, Inc. All Rights Reserved

Tools:
PrintEmailAdd This share icon
Next Post
  • digg share
ADD COMMENTS
Remaining characters


Current DateTime: 01:43:38 16 Nov 2009
LinksList Documentid: 29778428

Current DateTime: 01:37:49 16 Nov 2009
LinksList Documentid: 29779196

Current DateTime: 01:37:49 16 Nov 2009
LinksList Documentid: 29779199

Current DateTime: 01:37:49 16 Nov 2009
LinksList Documentid: 29779198
  Data is a real-time snapshot  *Data is delayed at least 15 minutes
Global Business and Financial News, Stock Quotes, and Market Data and Analysis

© 2009 CNBC, Inc.  All Rights Reserved.
A Division of NBC Universal
Thomson ReutersThomson Reuters