Swiss giant, Novartis, has moved to the number one spot in the world’s generics league table with the purchase of privately-held German firm, Hexal, and its partner, Eon Labs of the USA, in a 5.7 billion-euro deal.
Novartis says it has signed definitive agreements to acquire 100% of Hexal – Germany’s second largest generics drugmaker – and a 67.7% stake in Eon Labs, which will be merged with the Swiss company’s Sandoz generics business. Once the deal is closed, Novartis says that Sandoz will be the global leader in generics with combined pro forma 2004 sales of some $5.1 billion dollars, and a leading position in many of the world’s markets for generic drugs, including the USA and Germany, as well as a strong foothold in both Asia and Latin America. After the deal completes, Novartis will launch a tender offer to acquire the remaining 31.9 million Eon shares for $31 each – around a 10% premium on the firm’s closing share price on Friday. Hexal, which was founded by twin brothers Andreas and Thomas Strüngmann, brought in sales of some $1.7 billion in 2004, while Eon Labs reported $431 million in revenues during the same period – a 31% increase over 2003.
Novartis has made no secret of its desire to become a generic powerhouse, buying Slovenian company, Lek, back in 2002 [[22/11/02e]], and then gobbling up Canadian rival, Sabex, in a $565 million deal last summer [[16/08/04d]]. The Swiss firm expects the deal, which it says will strengthen its technology base, particularly in transdermal patches and inhalation products, will bring annual cost synergies of some $200 million within three years of closing the deal, half of which should be realised in the first 18 months. The purchase is expected to be accretive to earnings within 12 months of closure, which it expects in the second half of 2005. “The strong growth outlook for Sandoz, which will create jobs, is expected to partially compensate for necessary reductions in the workforce,” the company said in a statement.