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Pfizer’s Kindler KO’d by Teva’s Yanai

Teva and Pfizer
Teva and Pfizer

The 800-pound gorilla of one industry has beaten the 800-pound gorilla of another. Teva CEO Shlomo Yanai took on Pfizer CEO Jeff Kindler and won. Not the sandal company Teva, which is pronounced tee-vuh, but the generic drug company Teva, which is pronounced teh-vuh. (It’s Hebrew, by the way, for nature.)

Usually these two Goliaths fight each other tooth and nail over drug patents. PFE’s lawyers work to protect them, TEVA’s attorneys work to break them. It’s just the nature of the branded and generic drug businesses these days. They’re just as much law firms as they are pharma firms. After all, Kindler was PFE’s top lawyer before becoming CEO.

But in this case, the two were duking it out over an acquisition target.

They both wanted a privately held generic drug company in Germany, named Ratiopharm. Teva and Pfizer have deep pockets. But the Israeli generic drug giant was apparently willing to dig deeper than Pfizer and came in with the highest bid.

Typically, when a publicly traded company like Teva goes out and spends around $5 billion to buy another company, investors will sell the stock. They figure profits will likely take at least a temporary hit, workers and management will be distracted by putting the two companies together, etc. But that’s not what they’re doing today with shares of Teva, which are trading at an all-time high. The company says the deal is going to add to earnings quicker than some analysts thought it would.

Tomorrow morning I’ll be doing a live interview with Teva’s North America CEO Bill Marth on “Squawk On The Street” shortly after 9 a.m. ET. We’ll be talking about the deal and, of course, health care reform coming to a head and what it will mean to Teva and the generic drug industry. Teva is fast becoming the generic drug industry. I guess, if the sandal fits, wear it.

  • Some facts about Teva's acquisition of Ratiopharm