Teva Acquires Majority Stake in Taiyo

May 19, 2011

On Monday, Teva Pharmaceutical Industries agreed to pay shareholders $460 million in cash to acquire a 57% stake in Taiyo Pharmaceutical Industry. Teva also will offer to buy all outstanding shares of Taiyo. The deal values Taiyo at approximately $1.3 billion.

Taiyo is the third-largest manufacturer of generic pharmaceuticals in Japan, and its 2010 sales totaled $530 million. Taiyo’s portfolio includes more than 550 generic drugs in various therapeutic areas and dosage forms, and its production capabilities include sterile manufacturing technologies, located in two facilities. Taiyo also has a research-and-development team and expertise in local regulations.

“This acquisition will enable Teva to deliver on our strategic objective of becoming a leading player in the fast-growing Japanese generics market. In fact, we now expect to reach our 2015 target of $1 billion in sales in Japan ahead of schedule,” said Shlomo Yanai, Teva’s president and CEO, in a press release. Taiyo’s market reach, production facilities, and large product portfolio will allow Teva to broaden the range of products it offers and increase its presence in the Japanese market, Yanai added.

Teva will fund the transaction through a combination of cash and debt. The company expects to complete the transaction by the end of the third quarter, subject to the approval of Taiyo’s shareholders.

In related news, Cephalon and Eurand lost a patent-infringement suit against Teva, Mylan, and Anchen Pharmaceuticals last Thursday. The lawsuit involved the defendants’ planned generic version of the muscle-relaxant, Amrix.

US District Judge Sue Robinson found that Teva’s Barr Pharmaceuticals unit, Mylan, and Anchen had infringed two patents for the Amrix formulation, but that the patents were invalid because the technology would be obvious to a skilled chemist. Scientists “would have been motivated to take a group of known elements to create an extended release version” of the drug, and “to have a reasonable expectation of success,” said Robinson in her opinion. “Therefore the invention was obvious.”

Cephalon filed the lawsuit in 2008 after the defendants asked FDA for permission to make low-cost copies of Amrix. Cephalon is reviewing the decision, but an appeal seems moot in light of the fact that Teva agreed to buy Cephalon for $6.2 billion on May 2, 2011.

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