Actavis will acquire Forest Labs for a combination of cash and equity in a deal set to be worth around US$25 billion. The deal will give Actavis access to higher margin, brand-name treatments for Alzheimer’s disease, hypertension and other disorders and fits well into the group’s strategy of buying specialty drugmakers to add to its portfolio of generics.

The combination of the two companies will ‘create an innovative new model in specialty pharmaceuticals leadership, with size and scale, a balanced offering of strong brands and generics, a focus on strategic, lower-risk drug development, and – most important – the ability to drive sustainable organic growth’, according to Chairman and CEO of Actavis, Mr Paul Bisaro.

Actavis and Forest Labs expect the combination to yield as much as US$1 billion in synergies and a double-digit boost to non-GAAP (generally accepted accounting principles) earnings in 2015 and 2016. While operating and tax synergies are estimated to be approximately US$1 billion, without taking into account any manufacturing or revenue synergies. The companies have also anticipated continuing to invest over US$1 billion per year in R & D.

Actavis already increased its brand-name presence when it acquired specialty drugmaker Warner Chilcott in 2013 [1]. The company has also been the subject of takeover bids, with offers from Mylan and Valeant Pharmaceuticals International and pharma giant Novartis all hitting the news.

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Reference

1.   GaBI Online - Generics and Biosimilars Initiative. Actavis makes definitive agreement with Warner Chilcott [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2014 Mar 7]. Available from: www.gabionline.net/Pharma-News/Actavis-makes-definitive-agreement-with-Warner-Chilcott

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