It has emerged that Teva Pharmaceutical Industries Ltd (NYSE:TEVA) is nearing a deal to sell some of its U.S. assets to Mayne Pharma Group for about $600 million. Teva is required to divest itself of certain assets before it can obtain regulatory clearance to acquire the generic arm of Allergan plc (NYSE:AGN). As such, besides Mayne, Teva is in talks with other companies for the disposal of some of its assets as required by regulators.
It is currently not clear what specific assets Teva and Mayne will be trading because the two companies appear to be keeping the transaction out of the public eye.
Teva’s assets earmarked for divesture in the U.S. are said to be worth about $2 billion. In addition to Mayne, some of the companies mentioned in connection with Teva U.S. asset sales include Impax Laboratories Inc (NASDAQ:IPXL), Cadila Healthcare, Dr. Reddy’s Laboratories Ltd (NYSE:RDY) and Sagent Pharmaceuticals Inc (NASDAQ:SGNT). Teva is also said to be engaging some private companies to harvest some of its assets targeted for divestiture.
Teva is also looking to sell some of its assets in Europe. The divestiture of the European assets is expected to unlock about $1.3 billion for the company. It is predicted that Teva would complete the divestiture of its European assets in the fall of 2016.
The world’s largest generic drug company
Teva is in the process of acquiring the generic operations of Allergan for $40 billion. The acquisition will solidify Teva’s position as the largest generic drugs company in the world. Sources have hinted that Teva is nearing obtaining U.S. clearance to acquire Allergan’s generic portfolio.
Teva is doubling down on generics business at a time when drug companies are facing growing rebelling from hospitals, payers, patients and governments over the expensive prices of drugs. Copycats of expensive drugs help to lower the cost of medicines.
Allergan is selling its generics business so that it can concentrate on branded drugs. The company also expects the divestiture to generate fresh cash that it can funnel to more strategic acquisitions and investments.