Actavis' acquisition highlights a growing trend occurring in the biotechnology, specialty, and generics fields. The likes of Gilead Sciences, MedImmune, Alpharma, Kos Pharmaceuticals, Cephalon, Amgen, Teva Pharmaceutical, and Ratiopharm over the last year has signalled a drive for these companies towards adopting a generic-directed approach.
Indeed Actavis' latest deal means it goes up against Teva, fresh from its merger with Ivax, which signifies a take over of the top generics position from Novartis' Sandoz unit.
The deal is worth $810 million (€677 million) in cash and will see both Alpharma's generics business and Amide Pharmaceuticals rebranded as with the Actavis name.
The purchase of Alpharma's business interests closely follows on from the company's acquisition of New Jersey- based Amide Pharmaceuticals in May 2005, giving the company a strong presence in the US.
Over one third of 2006 Group revenues are expected to be generated in this key market. In addition, Actavis will gain a local presence for its own-label products in the largest European generic pharmaceutical markets, Germany and the UK, as well as enhancing its position in Scandinavia, the Netherlands and Portugal
"Alpharma's strong liquid product portfolio complements Actavis' strengths in oral solid-dose products. We are also gaining access to Alpharma's marketing and distribution network in 11 countries together with additional production and R&D capabilities," said Robert Wessman, president and chief executive of Actavis.
Actavis will acquire additional US Food and Drug Administration (FDA) approved production capacity in the US in addition to European-approved (EU-GMP) plants in the UK, Norway and Indonesia.
The enlarged Group's total manufacturing capacity will be over 24 billion tablets and capsules. The EBITDA margin for the enlarged Group is expected to be around 19-20 per cent for 2006, with total revenues exceeding €1.3 billion.
According to IMS Health, Biotechnology products was up 17 per cent in 2004, with generics, rising 10 per cent, outstripping overall industry growth during the year.
Generics, however, accounted for only 8 per cent of 2004 sales by value in North America and Western Europe, even though they now represent more than 30 per cent of the market by volume in the US, Canada, Germany, and the UK.
Growth in the pharmaceutical market has been moderated by pressures and uncertainties over pricing, safety, and regulatory issues, although there was still strong underlying demand and pockets of higher growth.