Mylan CEO Eyes Acquisitions Valued at More than $4 Billion
10/25/2012| 04:53pm US/Eastern
--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. (>> Mylan Inc.) 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 (>> Watson Pharmaceuticals, Inc.) 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 (>> Hikma Pharmaceuticals Plc) 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 firstname.lastname@example.org
Subscribe to WSJ: http://online.wsj.com?mod=djnwires