Watson completes €4.25bn Actavis acquisition

Creates third largest global generics company

Watson Pharmaceuticals has completed the acquisition of the Actavis Group for €4.25bn, and in the process has created the world's third largest generic pharmaceutical company, with anticipated combined 2012 revenues in excess of US$8bn.

The new company will be called Actavis from the beginning of next year and employ 17,000 people. Watson said it would start a multi-year rebranding campaign for its facilities, operations and commercial presence, and move to trading under a new symbol on the New York Stock Exchange in 2013.

‘Adopting the Actavis name on a global basis, for our generics, brands and biosimilars businesses, is a logical and cost-effective solution,’ the company said.

We unite two powerful, profitable and rapidly growing companies into one exceptional global business. We will immediately begin to maximise the exceptional financial and commercial value of this combination

Watson, headquartered in Parsippany, New Jersey, US, expects $300m in annual cost synergy savings from the acquisition within three years.

‘We unite two powerful, profitable and rapidly growing companies into one exceptional global business,’ said Paul Bisaro, president and CEO of Watson. ‘As a result of accelerated integration planning, we will immediately begin to maximise the exceptional financial and commercial value of this combination.’

He added: ‘Over the past several months we have defined and communicated internally the Global Generics, R&D and Operations and Shared Services management structures and today begin operations as a combined company.

‘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.’

The acquisition has been funded through a combination of $1.8bn in term loan borrowings and $3.9bn in senior unsecured notes.

The combined company has operations in more than 60 countries, with top 10 positions in more than 33 markets including the US, UK, Canada, Australia, Nordics and Russia.

Approximately 40% of revenues of the combined company will come from outside the US

Watson said this global footprint provides an extensive platform for strong, future organic growth, particularly in the US, Central and Eastern Europe and Russia, and in Southeast Asia and Australia.

The company claims also to be the fastest growing generics pharmaceutical company in Western Europe, where growth is outpacing the overall market.

The combined company will be geographically diverse, with approximately 40% of its revenues coming from outside the US. It has a global product portfolio of more than 750 molecules offered in more than 1,700 different combinations and dosage forms. It also has expanded its leadership position in oral solid modified release and transdermal products, as well as semi-solids, liquids and injectables.

The US pipeline includes approximately 180 unique ANDAs pending at the FDA, including 47 First-to-Files, of which Watson believes more than 30 are exclusive.

Outside the US, the current pipeline includes more than 2,000 marketing authorisations pending approval and, globally, in excess of 600 new development projects are underway covering multiple dosage forms.

The combined company has a diversified global supply chain with various technological capabilities, including the ability to manufacture more than 40 billion dosages worldwide. It has the expertise to develop solid dosage, modified release, patch, gel, liquid, semi-solid and injectable products for all of its global markets.

New Global Generics management team has been created

Watson has announced a new Global Generics management team following the completion of the deal. Led by Siggi Olafsson, as president, the firm will now begin operations as one company.

Andrew Boyer will head the US generics business, which has approximately a 10% market share in the US, with Jean-Guy Goulet leading the Canada and Latin America business.

The European generics business, led by Lars Ramneborn, has been structured into seven country clusters of approximately equal revenue size and with similar market structures and dynamics. Ramneborn was previously Vice President of Strategy at Actavis.

The Asia and Middle East and Africa (MEA) generics business, led by Hordur Thorhallsson, has been structured into five country clusters, based on geographic location as well as similarities in market structure and commercial dynamics. Thorhallsson was Executive Vice President of MEA and Asia Pacific sales for Actavis.

Karen McTavish will lead the Australian business. She joined Watson in 2012 from Apotex to head this business following the acquisition of Ascent Pharmaceuticals.

The Global Generics R&D function will be led by Hafrun Fridriksdottir, who was most recently Actavis' Vice President of R&D, US, Europe and ROW, residing in the US and serving on the company's US.

Stefan Sveinsson will head the Specialty Pharmaceutical Development function, focusing on critical technologies for driving future product initiatives in both the Global Generics and Global Brands business. He joined Actavis in 1993, serving most recently as Executive Vice President of R&D.

Wolter Kuizinga will lead the International Business Development function, while Daniel Motto will hold a similar role in the US.

Watson's third-party sales business, which includes both Actavis' Medis business and Watson's Specifar Pharmaceuticals, will ultimately operate under the Medis name led by Valur Ragnarsson, who joined Actavis' Medis division in 2001.