Mumbai: The sale of the generics business of German drug major Merck KGaA moved into a higher gear with US-based Mylan Laboratories Inc reportedly ahead of other bidders with an offer of at least $6 billion. Other bidders in fray include Israel’s Teva Pharmaceutical Industries Ltd and Iceland’s Actavis Group.
According to a person in the private-equity sector familiar with the situation, Mylan’s bid is currently ahead of drug industry rivals as well as other financial bidders, including a consortium of private-equity firms, Apax Partners and Bain Capital, and another private-equity player Fortress Investment Group.
Merck expects binding offers this week, he said. A senior executive at Mylan declined comment on the bids. An email to Teva did not elicit an immediate response over the weekend.
If Mylan does ultimately win, it would help the US company climb the top 10 generic firms charts to almost triple its sales to $3.7 billion (Rs16,280 crore) per annum.
Mylan is learnt to have been emboldened to make an aggressive bid as it can shift production to the Hyderabad-based Matrix Laboratories Ltd, which Mylan acquired in 2006. Matrix could provide the German generics business with low-cost manufacturing that meets global standards, say industry analysts.
Matrix is currently one of the largest API (ingredient used to make tablets and capsules) manufacturers in India and produces most of the important drugs that Merck’s generics unit currently sells.
Matrix has also filed applications for drug master files (DMFs) and abbreviated new drug applications (ANDAs) with international drug regulatory agencies to sell generics in the developed markets of the Western world. Merck’s generic businesses comprise subsidiaries such as Alphapharm, the leading generic manufacturer in Australia, and Merck Generiques, based in France. Other important subsidiaries include Genpharm, in Canada, and Generics (UK).
In fiscal 2006 ended 31 March, Mylan has sales of $1.3 billion, while Teva, the worlds’s No.1 generics company, grossed $8.4 billion in revenues for calendar year 2006. Generics are the largest segment of Merck’s pharmaceutical business, accounting for 46% of revenues.
Merck, based in Darmstadt, Germany, will use some of the sale proceeds to pay down debt that it incurred in acquiring Serono SA, a Swiss biotechnology firm. The first round of bids for Merck’s generics unit were submitted by 12 March.
Investment bank Bear Stearns is handling the sale on behalf of Merck. The deal is expected to be wrapped up sometime in May.
Ranbaxy Laboratories Ltd, which was in the race for the Merck generics unit, withdrew as it found the price too rich for its comfort.