Teva Pharmaceutical Industries Limited TEVA announced that it has entered into an agreement with Takeda Pharmaceutical Company Limited TKPYY to address wide ranging needs of patients and growing importance of generics in Japan.
Under the terms of the agreement, Teva will hold a 51% stake in the combined company, which is expected to start operating from the second quarter of 2016. Teva will offer its generic medicines, while Takeda will offer its long listed products to the patients and health care system in Japan. No further information was provided.
We remind investors that Teva has been making strategic agreements to strengthen its generic business. In Jul 2015, the company signed a definitive agreement to acquire Allergan plc’s AGN global generic pharmaceuticals business for $40.5 billion. The deal is slated to close in the first quarter of 2016.
Teva is currently looking to raise approximately $6.75 billion through two concurrent offerings – the issuance of American Depositary Shares and Mandatory Convertible Preferred Shares worth $3.375 billion each. The net proceeds will be used towards the acquisition of Allergan’s generic pharmaceuticals business and the pending acquisition of Representaciones e Investigaciones Médicas, S.A. de C.V. (Rimsa) and general corporate purposes.
Teva had entered into a definitive agreement in early October to acquire Rimsa, a Mexican pharmaceutical company, for $2.3 billion. The transaction is expected to close by early first quarter of 2016.
Our Take
Teva’s decision to team up with Takeda, which has a leading brand reputation and strong distribution presence in Japan, is expected to meet the growing demand of generics and be aligned with the government’s objectives of 80% generic penetration by the end of fiscal 2020.
Teva currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is Achillion Pharmaceuticals, Inc. ACHN sporting a Zacks Rank #1 (Strong Buy).
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