The wave of consolidation sweeping through the generic pharmaceutical industry continued yesterday with the news that Iceland’s Actavis is to buy the generics portfolio of Alpharma of the US for $810 million dollars.
Actavis, a 50-year-old generics company, has only latterly looked beyond the borders of Iceland and embarked on a process of growth by acquisition, snapping up around 20 businesses between 1999 and 2005 and boosting revenues from 57 million euros to more than 450 million euros last year.
But Alpharma is by far the biggest deal in its history, and will make it the fourth-largest generics company in the world, after Teva/Ivax (whose merger is still in front of the regulators), Sandoz and Merck KGaA. Teva, Sandoz and Merck have all embarked on their own shopping sprees over the last couple of years and, in buying the Alpharma business, Actavis has ensured it will keep up with the leading pack. But the sector is still fragmented, and analysts expect there will be more M&A activity among the mid-sized generics players.
Crucially, the Alpharma acquisition, and earlier $500 million dollar purchase of Amide Pharmaceuticals, gives Actavis an eighth-placed ranking in the important US generics market.
The combined Actavis/Alpharma will have pro forma 2004 sales of more than 1.2 billion euros, over 600 products on the market and a further 200 in development, said Actavis, adding that it expects to launch 150 products in 2006 alone. The jewel in the Alpharma crown of late has been a generic version of Pfizer’s blockbuster epilepsy drug Neurontin (gabapentin), although growth in this product has fallen back due to increased competition after the expiry of Alpharma’s first-to-file exclusivity in the USA [[14/02/05e]].
Actavis expects 2006 revenues to rise to 1.3 billion euros, and again to 1.5 billion euros in 2007.
In terms of market share, Actavis/Alpharma will have around 3.9% of the global generics market, behind Merck’s 5.1% share, but still well behind the clear leaders, Teva and Sandoz, with 12.8% and 11.1%, respectively.
For Alpharma, the divestment will leave it with its higher-margin branded pharmaceutical business, active pharmaceutical ingredient activities and animal health unit, as well as ParMed Pharmaceuticals, a pharmaceutical distribution company. The group as whole reported revenues of $1.3 billion in 2004, with the generics business accounting for $843 million of that total. Alpharma’s lead branded product is Kadian, a sustained-release morphine product.