Teva to buy Barr Pharmaceuticals

Teva Pharmaceutical said Friday that it would buy rival generic drug maker Barr Pharmaceuticals for nearly $7.5 billion in a move that will boost Teva’s dominance as the world’s biggest generic drug maker.

The deal continues consolidation of the generic-drug sector, driven by growth prospects as governments and other payers turn to the lower-priced medications and by the impending expiration of brand-name drug patents worth billions of dollars a year.

Israel-based Teva Pharmaceutical Industries Ltd. said acquiring Montvale, N.J.-based Barr Pharmaceuticals Inc., the world’s No. 4 generic drug maker, will also expand its presence in U.S. and other key markets, from Russia to Eastern and Central Europe.

Barr shareholders will receive $39.90 in cash and 0.6272 of a Teva American depositary receipt for each share they own, a total of $66.50 per share. Teva also is offering to assume $1.5 billion of Barr’s debt.

Shlomo Yanai, Teva’s chief executive, said the two companies have minimal overlap in products and that Barr would add to his company’s products and research pipeline, particularly in women’s health.

The combination is part of a trend toward globalization over the last five years, with U.S. and foreign generic drug makers expanding into each other’s territory through increased marketing, new products or acquisitions, said Doug Long, a generics analyst at health data firm IMS Health.

In addition, drugs with sales exceeding $54 billion a year are set to lose patent protection by 2012, according to prescription benefit manager Medco Health Solutions.

The largest maker of oral contraceptives in the U.S., Barr sells generic versions of Yasmin and many other contraceptives. It also sells 27 brand-name drugs, including the contraceptive Seasonique, which limits menstrual periods to four times a year, and the Plan B emergency contraceptive.

Teva, considered the largest company based in Israel, sells a new, brand-name multiple sclerosis drug, Copaxone, and is developing experimental drugs for other neurological diseases, cancer and immune and inflammatory disorders.

Barr stock rose $6.26, or 11%, to $63.43. American depositary receipts of Teva, each representing one ordinary share, gained $1.82, or 4.4%, to $42.87.