Actavis sets Barr higher in bidding war for Pliva

By Gregory Roumeliotis

- Last updated on GMT

Related tags Pliva Food and drug administration Pharmacology Generic drug

The battle for the acquisition that will form the world's third
biggest generic drugmaker has intensified, with Iceland's Actavis
making a new offer for Croatian drug manufacturer Pliva that
surpasses that of US pharmaceutical firm Barr by $200m (€156m).

The offer from Actavis for $2.5bn follows Barr's $2.3bn bid two months ago for Pliva, underlying the competitive pressure for generic companies to consolidate and find cheaper locations for their manufacturing operations.

The bidding process can proceed for two months after Actavis has published its bid, so with Barr indicating it plans to respond to the offer by September 8, the charm offensive targeting Pliva could go on until November.

Both rivals claim an advantage; Barr's bid has been endorsed by Pliva's supervisory board while Actavis already owns 20.8 per cent of the company's shares.

At stake is ownership of Eastern Europe's largest drugmaker by sales, with operations in more than 30 countries, specialising in the production of biologicals, cytostatics, and other value-added generics, as well as active pharmaceutical ingredients (APIs).

Acquisition-happy Actavis, already one of the five leading generics companies in the world, has made eight acquisitions in the last year, including the generic drug business of Alpharma and Amide Pharmaceutical in the US.

"We have already built a strong position in the US, where we expect one third of our revenues to generate in, and are solidifying our position in key generics markets such as the UK and the Netherlands, so we would like to use the Pliva brand to expand to Eastern European markets to complement our presence in countries such as Serbia and Bulgaria,"​ Actavis spokesman Halldor Kristmannsson told when the company first launched a bid for Pliva in March.

The Icelandic firm believes Pliva is the next logical step in its acquisitive path, a strategy which has led to a pre-tax profit of €40.9m in the second quarter compared to €16.1m in Q2 of 2005.

If Actavis proves successful in its bid, it plans to consolidate its manufacturing facilities worldwide and transfer production to Croatia from other existing sites to take advantage of the high-skilled manufacturing environment and lower costs.

US firm Barr also has high ambitions for Pliva, planning to make it its headquarters for its European operations - it does not have a presence across the pond - while the European facilities will offer Barr the opportunity to move manufacturing of products to Croatia, increasing both production and employment at the Croatian and other European facilities.

With 50 generic drugs in development, Barr will also gain the 120 that Pliva has in its pipeline and the capacity to expand into copies of genetically engineered medicines.

Still it will not be all rosy for the winner of this bidding competition as Pliva is struggling to recover from a failed venture into proprietary drugs in 2005.

In the first quarter of 2005 the company's pretax profit took a dive of 61 per cent year-on-year to $39.2m after the patent expiry in the US of its blockbuster antibiotic azithromycin reduced its royalties from the drug to $8.3m from $73m, so clearly whoever owns Pliva will have some streamlining to do.

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