--Mylan CEO says generic drug maker has financial flexibility
for deals valued more than $4 billion
--Deals could expand specialty business
--Emerging-market generic makers could be targets
(Adds comment from analysts, beginning in the eighth paragraph;
updates stock price.)
By Peter Loftus
Generic-drug maker Mylan Inc. (MYL) is on the prowl for
acquisitions to bolster its product line and expand geographically,
and would consider deals valued at more than $4 billion, the
company's leader said Thursday.
"I think there are a number of acquisitions that would be
compelling and complementary to our existing platform," Chief
Executive Heather Bresch said in an interview after the company
reported improved sales and profit for the third quarter.
The generic-drug industry has undergone consolidation in recent
years, the latest example being Watson Pharmaceuticals Inc.'s (WPI)
agreement to acquire Actavis for about $5.5 billion. Intense
generic-drug pricing competition and other factors have convinced
generic companies of the need to bulk up, and to diversify into
nongeneric businesses such as branded, specialty drugs.
Ms. Bresch said Mylan's ability to generate strong free cash
flow has given the company "unprecedented financial flexibility,"
which can be put to use on deals.
She said Mylan might pursue acquisitions to expand its
specialty-drug division. The specialty division, whose flagship
product is the Epipen auto-injector treating severe allergic
reactions, sells branded products and accounts for about 13% of
total company revenue in the first nine months of this year.
"We have an opportunity to leverage that infrastructure here in
the U.S., and we're continuing to build that globally," she
said.
Mylan also would consider deals to widen its range of
drug-dosage forms, Ms. Bresch said. The company has a strong core
business of making solid, orally administered pills, but it would
consider using deals to expand into other dosage forms such as
those applied topically on the skin.
RBC Capital Markets analyst Shibani Malhotra said Mylan could
pursue geographic expansion by acquiring generic makers in emerging
markets, such as Hikma Pharmaceuticals PLC (HIK.LN) of Jordan,
Strides Arcolab Ltd. (532531.BY ) of India, or Abdi Ibrahim of
Turkey.
A Hikma spokeswoman declined to comment. Spokesmen for the other
companies couldn't immediately be reached.
A Mylan spokeswoman declined to comment on potential acquisition
targets.
J.P. Morgan analyst Chris Schott said the right acquisition for
Mylan could address investor concerns about a potential slowdown in
profit growth beyond 2013.
Mylan shares rose $1.06, or 4.4%, to $25 Thursday.
Write to Peter Loftus at peter.loftus@dowjones.com
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