Barr Laboratories is engaged in a neck-in-neck bidding war with Actavis, an Icelandic generics company, to acquire Pliva, the largest generics drug maker in Eastern Europe.
At press time, Barr had offered $2.3 billion for the Croatian company, just topping a bid by Actavis. Croatian authorities have 14 days to review the bids, but could take an additional 30 at their discretion.
If Barr's bid is accepted, the company would become the world's third largest generics manufacturer, in an industry where consolidation has been rampant. Novartis and Teva currently top the list.
Pliva's US products include generic versions of Diflucan (fluconazole), Prozac (fluoxetine), Reglan (metoclopramide), and the immunosuppressant cyclosporine.
Barr has a large portfolio of hormone therapy and contraceptive products, but also produces cardiovascular, anti-infective, and psychotherapeutic drugs, making for some crossover with Pliva.
"The combination of Pliva and Barr would create a substantial global pharmaceutical company," said Carol Cox, Barr's vice president for investor relations and corporate communications, in an e-mail. "Both have a broad and rich pipeline of products. Both have complementary workforces. And both have exceptional strengths in product marketing and manufacturing."
Cox added that the acquisition would allow Pliva to capitalize on Barr's marketing and regulatory expertise in the US, while Barr would gain access to European markets, particularly the emerging markets in Eastern Europe and Russia.
If completed, the merger could bring in annual revenues of $2.5 billion for Barr, and create a $200 million product-development budget.
In an analyst report for Argus Research, Martha Freitag noted that the acquisition would give Barr a greater foothold in international markets and provide access to low-cost manufacturing operations in Poland and Croatia.
Barr would also gain injection and ointment technology for new drug formulations.
Pliva has also set its sights on generic biologics. It is working to develop a biogeneric for EPO that would compete with Amgen's Epogen and Johnson & Johnson's Procrit.
Its relationship with Barr dates back to March 2005 when the companies agreed to develop a biogeneric for Amgen's Neupogen (filgrastim)--a project that Cox said first alerted Barr to the synergies between the two companies' workforces.
"I think it's an opportunity to increase [Barr's] size and their growth significantly," Freitag said in an interview, noting that Barr lacks European marketing experience. She added that the purchase price seemed reasonable.
Actavis too pointed to its greater penetration in Europe--as well as the 21 percent stake it already owns in Pliva. "We have a lot more synergies than Barr," said Actavis President and CEO Robert Wessman. "It's not about who has the biggest wallet."
Wessman added that the acquisition would provide an opening into developing biogenerics as well as strengthen the company in therapeutic areas such as oncology."In many ways, it's a good fit," he said. "We believe that Pliva is too small to be successful as a standalone company. If we come together, we can really gain critical mass in those key markets."
Pliva issued a statement stressing that antitrust issues in the US would need to be resolved before either deal can move forward.