The 2,200 employees at the ratiopharm sites in Ulm and Blaubeuren will be pleased to hear that Shlomo Yanai, Teva’s President and Chief Executive Offer, announced that the production sites in Ulm and Blaubeuren will not only be maintained but even expanded as part of Teva’s plans to reinforce the company’s leading position in Europe.

The ratiopharm brand will not disappear after the acquisition but will have an even stronger presence.

Teva expects to complete the transaction by the end of 2010, as there were no anti-trust hurdles. Teva expects to achieve 300 million euros of synergies over three years thanks to the deal.

Teva prevailed over US giant Pfizer and the Icelandic company Actavis in the bidding for ratiopharm. The sole heir of the Merckle group of companies, Ludwig Merckle, had no choice but to put ratiopharm up for sale in order to cover bank loans. The Merckle group fell into financial difficulties as a result of the worldwide economic crisis and speculation with VW shares. Merckle's father, Adolf Merckle, could not face the idea of the imminent company collapse and committed suicide at the beginning of January 2009.

Yanai stressed that Teva Pharmaceuticals sees Ulm-based ratiopharm as an “ideal platform” for reinforcing the company’s leadership position in European markets, “most notably in Germany, as well as in the rapidly growing generic markets such as Spain, Italy and France.” The world’s largest generic pharmaceuticals producer is hoping to triple its European turnover to 15 billion dollars by 2015. “Besides the technical skills of the workforce we are particularly impressed by the quality and efficiency of production plants compared with other international companies,” said Shlomo Yanai, who also pointed out that Teva’s plans to expand its position in the European market were instrumental in the decision to purchase.

“The final selection proved to be extremely difficult, but it also suited us,” said Hans-Joachim Ziems, the VEM-mandated managing director for the bidding process. “All companies have approved their incredible interest in almost the same conditions. We have emphasised from the beginning that both the purchase price, but also the strategic concept of the integration of ratiopharm into the acquiring company plays a central role.” The sale of ratiopharm to Teva means that the Holding company of the Merckle group is now debt-free.

Oliver Windholz, Chief Executive Officer of ratiopharm, also declared himself very satisfied with the transaction: "Teva is a natural match for ratiopharm, with its international focus and our shared generic vision. We are convinced that together we can achieve enormous growth in all markets. Being part of the Teva family will enable our management team and employees to continue to grow our business and fully materialise the great talent we have at ratiopharm."

Ludwig Merckle, the representative of ratiopharm's family owner said: "The separation from ratiopharm is a painful step for us as the founding family. But now that it has happened, I am confident that it is a good solution. Finding the best home for ratiopharm was a vital element in this process. I believe that joining forces with the world's largest generic company will enable ratiopharm to continue its path of growth and success."

The acquisition of ratiopharm will position Teva as the leading generic pharmaceutical company in Europe. It will increase Teva’s European business from sales of $3.3 billion in 2009 to joint pro forma sales of $5.2 billion.

Teva will also improve its market position in Germany, the world’s largest generic drug market valued at approximately $8.8 billion (including sales to hospitals and OTC), where it will become the number two player in the market. Previously Teva was relatively underrepresented on the German market, while ratiopharm had a market share of 27-28 %.

From Teva’s point of view the purchase of ratiopharm has several advantages: the ratiopharm product portfolio includes 500 molecules in over 10,000 presentation forms covering all major therapeutic areas marketed in 26 countries. Ratiopharm also has valuable know-how in biosimilars, consisting of a number of products in advanced stages of development and a well-established sales and marketing team.

In 2009, ratiopharm achieved worldwide revenues of 1.6 billion euros. According to the Financial Statements, 2009 outperformed previous results and the company forecast. With 307 million euros, the EBITDA for the generic business of the ratiopharm Group outperformed the previous year’s results. Following the completion of the ratiopharm acquisition, the combined entity will have 40,000 employees worldwide, of whom 18,000 will be based in Europe. The German headquarters for the combined entity will be located in Ulm. The German Teva subsidiary is currently headquartered in Hesse.

Sources:
Teva Pharma, 18th March 2010 /VEM/ratiopharm, Telephone conference, Cologne, 18th March 2010