Teva-Mylan-Perrigo Generic Merger Madness

April 23, 2015

On Tuesday, Teva Pharmaceuticals launched a $40.1 billion hostile bid for smaller generic rival, Mylan.

If Teva and Mylan were to merge, the merged company could displace Pfizer as the fourth largest global pharmaceutical manufacturer.

The merger, however, may face hurdles in terms of winning antitrust approval because, according to Pennsylvania-based Mylan, there would be "significant overlap in the company's businesses." Mylan CEO Robert Coury argues the Teva Mylan combination is “without sound industrial logic or cultural fit.”

Meanwhile, on April 8, Mylan made an unsolicited offer of its own to buy Ireland-based Perrigo Company for $29 billion. The cash-and-stock transaction that would produce a giant with critical mass in specialty brands, generics, over-the-counter and nutritional products. Teva says this offer would have to be rescined should Mylan agree to its takeover bid.

According to Forbes, whatever Teva/Mylan/Perrigo merger is concluded, a combined company "could control almost a quarter of the unbranded generic market which could equate to more than $50 billion in sales."

If any of the mergers are successful, the Federal Trade Commission will most likely require divestiture of assets, allowing for a top down restructuring to the victors of the merger madness, resulting in the divesting of lower margin legacy products.