More Videos
SPECIAL REPORT
MOST SHARED
- Pharma & Social Media
- CNBC TRANSCRIPT: Warren Buffett & Bill Gates - Keeping America Great
- Cities With the Most Home Price Reductions
- Warren Buffett and Bill Gates Share Their 'Optimism' With Eager Columbia Business Students
- Microsoft's Bill Gates Praises Apple's Steve Jobs For 'Saving the Company'
- Disney Profit, Sales Top Street Forecasts; Shares Jump
- Warren Buffett's $100,000 Offer and $500,000 Advice for Columbia Business School Students
- Is Euphoric Market Ignoring Warning Signs?
- China Fourth Quarter Growth Could Hit 10%: Official
- Obama to Outline Strategy to Boost US Exports to Asia
- EXCERPTS and IMAGES: Warren Buffett & Bill Gates - Keeping America Great
- Microsoft's Bill Gates Praises Apple's Steve Jobs For 'Saving the Company'
- Gold Is a Bad Inflation Hedge—Like Oil: Stock Picker
- Intel's Andy Bryant Offers An Explanation
- US 'Actively Working' on Weaker Dollar: Fund Manager
- Options Boil on Biotech Buyout Rumors
- Warren Buffett's $100,000 Offer and $500,000 Advice for Columbia Business School Students
- Activision Blizzard's "Modern Warfare 2" Sales Break Records
- 5-Star Manager's 5 Stocks for Changing Markets
- Obama to Outline Strategy to Boost US Exports to Asia
- Friday May See 'Risk Trade' Stalling; Dollar in Focus
- Job Market Politics to Keep Interest Rates Low
- AIG, Symbol of Crisis, Watches Its Stock Zoom Back
- Disney Profit, Sales Top Street Forecasts; Shares Jump
- Bill Gates Praises Apple's Jobs for 'Saving the Company'
- Cities With the Most Home Price Reductions
- Is Euphoric Market Ignoring Warning Signs?
- Video Game Sales Plunge, but Have They Hit Bottom?
RSS FEED
Pharma's Market
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.
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?
Data is a real-time snapshot *Data is delayed at least 15 minutes