Mylan gains Abbott's non-US generics

Mylan Inc has struck a deal with Abbott to buy its generics business outside the US.

The transaction diversifies Mylan's business and strengthens its commercial platform outside the US, building new opportunities for growth and additional sales channels in the acquired markets. It is expected to provide Mylan with significant funds for future investments, an additional $600 million of annual post-close EBITDA, an optimised global tax structure and enhanced balance sheet capacity.

In the deal, Abbott will receive 105 million shares of the combined company, worth approximately $5.3 billion based on Mylan's closing price of $50.20 on 11 July, representing an approximately 21 per cent ownership stake.

The acquired portfolio includes more than 100 speciality and branded generic pharmaceutical products in the cardio/metabolic, gastrointestinal, anti-infective/respiratory, CNS/pain plus women's and men's health therapeutic areas and includes several patent protected, novel and/or hard-to-manufacture products with continued growth potential.

The assets are expected to provide approximately $1.9 billion in annual additional revenues at deal close, along with an active salesforce of about 2,000 representatives and two manufacturing facilities.

Mylan Executive Chairman Robert J Coury commented, "We have been actively looking at a wide range of opportunities, and the acquisition of this business is absolutely the right next strategic transaction for Mylan as it builds on our strong momentum, expands and further diversifies our business in our largest markets outside the US, and clearly positions Mylan for the next phase of growth through enhanced financial flexibility and a more competitive global tax structure."

Mylan CEO Heather Bresch said, "We targeted this differentiated business with a complementary portfolio of attractive specialty and branded generic products, many of which have strong continued growth potential. The assets also have an impressive commercial infrastructure and capabilities, which provide us with reach in the physician and patient channels in the acquired markets, complementing our reach in pharmacies. This enhanced commercial platform will help us drive the continued expansion of EpiPen Auto-Injector globally and enable us to more effectively launch important growth drivers, such as respiratory and biologics."

"Mylan is the right organisation for our developed markets branded generics business," said Miles D White, Chairman and Chief Executive Officer of Abbott. "Mylan has the scale and breadth across critical distribution channels and a complementary portfolio that will quickly position this business for success. Mylan also shares our commitment to patients and product quality."

The transaction brings Mylan key products including Creon, Influvac, Brufen, Amitiza and Androgel.

The business's strong salesforce in key developed markets enhances Mylan's reach with doctors and patients and complements Mylan's existing strength in pharmacies and will help the global expansion of EpiPen Auto-Injector and the launch of biologics and respiratory products, including generic Seretide and generic Advair.

The transaction is expected to lower Mylan's tax rate to approximately 20-21 per cent in the first full year, and to the high teens thereafter.

Abbott will transfer the assets to a new public company, New Mylan, organised in the Netherlands. Immediately following the transfer, Mylan will merge with a wholly owned subsidiary of New Mylan, and New Mylan will become the parent company of Mylan. The new public company will be called Mylan N.V. and will be led by the current Mylan leadership team and headquartered in Pittsburgh.

The transaction is expected to close in the first quarter of 2015.