Bloomberg reports that increased competition with cheaper generics may push Teva to make a major acquisition soon.
Perrigo Company (NYSE:PRGO; TASE:PRGO) may be a suitable acquisition for Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA), according to a report by “Bloomberg” today. According to the report’s authors, Teva will have to jump on the acquisition bandwagon soon, in part because of increased competition with cheaper generics companies – competition that will begin eroding Teva’s profits already this year.
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Expiring patents and slowed growth are not unique to Teva, but while the Israeli pharmaceutical company did not make any significant acquisitions in 2014, acquisitions totaled $234 billion in pharmaceutical industry for the year globally.
Why Perrigo? The Bloomberg article explains that Teva plans to expand in the field of over-the-counter remedies (OTC), and Perrigo may be a good match. Another acquisition candidate mentioned in the article is Sweden’s Meda AB.
“Investors have seen what these deals are doing to the share prices” of other acquirers, Gabelli & Co. analyst Kevin Kedra told “Bloombers.” “Teva has a healthy business, but in this environment if you’re not doing deals, you’re probably not taking advantage of the opportunities that are out there.”
Last month, New York-based Royal Bank of Canada analyst Randall Stanicky wrote in a report that if Teva were to acquire Perrigo, it would boost Teva’s growth rate and reduce its exposure to Copaxone. Stanicky further estimated that a deal financed 80 percent with cash and 20% in stock would drive an increase of 30% in Teva’s share price.
Published by Globes [online], Israel business news – www.globes-online.com