Watson To Acquire Andrx for $1.9 Billion

March 16, 2006
Patricia Van Arnum

Patricia Van Arnum was executive editor of Pharmaceutical Technology.

ePT--the Electronic Newsletter of Pharmaceutical Technology

Watson To Acquire Andrx for $1.9 Billion

Watson Pharmaceuticals Inc. (Corona, CA, www.watsonpharm.com) has agreed to acquire Andrx Corporation (Fort Lauderdale, FL, www.andrx.com) for $1.9 billion or $25 per share. The deal would create the third largest generics pharmaceutical company in the United States based on total prescriptions dispensed, according to Watson.

“Our acquisition of Andrx significantly supports our long-term goal of expanding our existing product portfolio and pipeline, while strengthening Watson’s position in high value, specialized sustained-release technology,” said Watson’s chairman and CEO Allen Chao, in a company statement. “The combined revenue stream will fuel further product development and sales, while allowing Watson the flexibility and financial resources to continue building its brand and generic businesses through internal product development and product in-licensing.”

The combined company would have estimated 2007 revenues of $2.8 billion and more than 60 abbreviated new drug applications in its pipeline.

Andrx develops and commercializes generic versions of primarily controlled-release pharmaceutical product as well as oral contraceptives and selective immediate-release products. It also develops and manufactures pharmaceutical products for other drug companies, including combination products and controlled-release formulations. Its third piece is a generic distribution business.

Following the close of the transaction, Watson will have three operating divisions: brands, generics, and distribution. Anda, Andrx’s generic distribution business, will operate and be managed as an independent division.

The deal is expected to close in six months. The merger has been approved by the boards of directors of both Watson and Andrx. The deal is subject to approval by Andrx stockholders; approval of Watson stockholders is not required to complete the merger. Watson says it expects to achieve cost synergies in sales, general, and administration areas.

Andrx deal follows moves by Watson to streamline manufacturing

Watson’s pending merger with Andrx comes in the wake of several key strategic initiatives underway by Watson for improving utilization of existing manufacturing facilities, site rationalization, and the establishment of offshore product development and manufacturing capability.

Watson announced in the fourth quarter 2005 plans to discontinue operations at its Puerto Rico solid-dosage manufacturing facility and to transfer the products to its Carmel, New York, and Corona, California manufacturing sites, which the company says have sufficient capacity to absorb additional production volume.

Watson also acquired a manufacturing facility in Goa, India, which will produce solid-dosage generic products for the US market, and increased its investment in an US Food and Drug Administration-approved Chinese/Taiwanese company specializing in developing and manufacturing active pharmaceutical ingredients (APIs).

During 2006, Watson plans to establish a generic product development center in India. Watson said last month that it had recently entered into a definitive, confidential agreement to acquire an Indian company with facilities and expertise in manufacturing select APIs.     

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