Watson Pharmaceuticals is getting hold of 17 generics which are being divested as a prerequisite of Teva's $7.5 billion takeover of Barr Pharmaceuticals.

Under the terms of the deal, Watson will make a $36 million upfront payment to Teva in order to get access to the drugs, which include 15 treatments that have already been approved by the US Food and Drug Administration and are being sold to comply with antitrust regulations. The key products in the portfolio are the transplant drug cyclosporine, the diabetes combination glipizide/metformin, the antidepressant mirtazapine, the antidiuretic desmopressin and the nausea drug metoclopramide.

Watson will make additional payments to Teva when certain milestones are met on the two development-stage products included in the deal. The Israeli-headquartered firm will supply the latter drugs to Watson until manufacturing is transferred to the buyer or a third party.

Paul Bisaro, chief executive of Watson, said that the products “represent a sound complement to our extensive generics portfolio". He added that these new generics “will have immediate value that we will begin to realise in early 2009."

The sale is dependent on Teva completing its acquisition of Barr and last week the shareholders of the latter firm gave the deal the green light. The transaction is expected to be done and dusted before the end of the year, and Teva recently announced that it had renegotiated bank funding for the deal which will see it assume $1.94 billion of Barr's existing debts.