July 27--Pharmaceutical company Allergan has agreed to sell its generic drug unit to Teva Pharmaceutical Industries of Israel for $40.5 billion, a move that will allow the Ireland-based company to focus on branded drugs, including blockbuster wrinkle treatment Botox.
The acquisition is the latest in a series of pharmaceutical industry mergers and acquisitions, and latest reconfiguration of Actavis the Ireland drug company that bought Allergan in November and took over its name.
On Monday, the new Allergan agreed to sell its generic brand division to Teva. Allergan will receive $33.75 billion in cash and $6.75 billion in Teva stock. Analysts said it was the largest-ever acquisition by an Israeli company.
Teva is the world's largest maker of generic drugs. The company said the acquisition would provide patients with more access to affordable medicines.
"Our acquisition of Allergan Generics ... will accelerate our ability to build an exceptional portfolio of products, both in generics and specialty as well as the intersection of the two," Erez Vigodman, chief executive of Teva, said in a statement.
Brent Saunders, chief executive of Allergan, said in a statement the sale would help his company enhance its "global-branded pharmaceutical business and strengthen our financial position."
"While we were not actively seeking a buyer for our generics business, Teva presented an offer at a very compelling valuation that reflects and recognizes the significant value that our global generics team has generated in creating and managing a world-class generics business," Saunders said.
In addition to Botox, Allergan retains Restasis, a treatment for chronic dry eye that generated $1.1 billion of sales last year, Juvederm, another wrinkle treatment, and a host of other branded medicines.
In November, Actavis agreed to pay $66 billion to acquire Allergan, the Irvine maker of Botox and a line of ophthalmic medicines. The companies combined under the Allergan name and retained Actavis' headquarters in Dublin.
The new Allergan has U.S. headquarters in New Jersey and continues to have a presence in Irvine.
Teva's leadership has been saying for months that it believes some of the biggest generic drug companies should combine in order to save money and become more efficient.
A big deal like this would allow the drugmaker to improve its profitability by cutting jobs and other overlapping costs from the combined businesses. It also would increase its leverage in negotiating drug prices with insurers and other payers, an ever-important piece of leverage in key markets like the United States, where insurers, employers and other payers are pushing to hold down rising costs that have outpaced inflation for years.
The Associated Press contributed to this report.
stuart.pfeifer@latimes.com
