Watson Pharmaceuticals has completed its acquisition of Actavis for 4.3 billion euros.
This combination creates the world’s third largest generic pharma company, with anticipated pro forma combined 2012 revenues of more than $8 billion. Teva remains the top dog in generics followed closely by Novartis’ Sandoz unit, but Watson hopes that this merger could start to eat into the two firms’ market leading position.
But the deal isn’t all about generics – Watson said that the firm would have “to start investing heavily in R&D” and will also be looking to biosimilars – which can cost around $100 million per drug to develop – as a serious source of investment. Amgen and Watson already have a deal in place to develop biosimilars, and spend around $400 million to do so.
The company will also be looking to branded drugs, primarily in areas where it already has portfolios, such as women’s health and urology.
“Today we unite two powerful, profitable and rapidly growing companies into one exceptional global business,” said Paul Bisaro, president and chief executive of Watson.
“With the acquisition complete, we now have the generic assets in place that will power our continued organic growth, and generate strong cash flow to support the rapid pay-down of debt, which will allow us to continue to focus on future investments to enhance all of our businesses, particularly our global brands and biosimilars businesses.
“I am confident that working together, the 17,000 people of our new company will now be focused on the seamless integration of the company for strong and sustainable growth.”
Watson said in a statement that as part of the acquisition, the firm will cut about $300 million in costs over three years, and close some of the combined companies’ 28 manufacturing plants.
Watson also said that it will adopt the ‘Actavis’ name as its new global brand, effective from 2013.
The company said it will initiate a multi-year rebranding campaign for its facilities, operations and commercial presence, and would also start trading under a new symbol on the New York Stock Exchange from next year.
The Actavis name is believed to be more recognised globally and carries a greater deal of weight in emerging markets. Bisaro said: “With our expansion into more than 60 commercial markets around the world, we recognised the many benefits of uniting our company under one name to all stakeholders.”
He said the company looked at over 2,000 potential new names, but said it “became clear that one of the many assets within the Actavis acquisition was a single name, trademarked and protected around the world”.