Another generic(s) merger
As we shown (here, here, and here), the generic drug market has been cosnsolidating over the last few years, with numerous cross-border acquisitions. That trends continues with the US's Mylan Laboratories announced acquisition of 71% of India's Matrix Laboratories. The deal as announced with be for $736 million.
Mylan is the #4 company in the US generics drug market, after Swiss-based Sandoz-Novartis, Israel's Teva, and US-based Barr Pharmaceuticals. Mylan had an earlier attempt to buy US rival King fail.
According to an article in the Financial Times ("Mylan in $736m deal for control of Matrix", 8/29/06), the motivation is party fear, partly hope of new markets:
Faced with pricing pressures in a commodity business, generic companies are seeking to expand manufacturing to low-cost countries like India. Along with scale in manufacturing, they seek global reach in marketing to push products beyond traditionally lucrative markets of the US or Western Europe.
Aside from lower-wage factories in India, matrix has presence in Europe, Africa, and China that will help Mylan expand.
In Europe, Matrix recently bought drug distributor Docpharma last year. Matrix is India's #6 drug company. In Africa, Matrix has agreements with Aspen Pharmaceutical Holdings to develop AIDS drugs. Apparently both Teva and Watson already have Indian operations.
Generics are a growing market, with over 50% of the US prescription drug market, growing from around 20% in the 1960s. Worldwide demand is growing as well.
