Teva Expands Women's Health Biz - Analyst Blog

Teva Pharmaceutical Industries Ltd. (TEVA) recently completed the acquisition of Theramex, a Europe-based women's health business with a presence in several countries.

Teva had initially announced its intention to acquire Theramex in late October 2010 at which time the company entered into a definitive agreement with Merck Serono, a division of Merck KGaA (MKGAF).

Acquisition Will Strengthen Women's Health Biz

We expect this acquisition to help Teva strengthen its women's health segment. Theramex has a wide range of women's health products in its portfolio which are sold in 50 countries across the world. Theramex has a strong presence in France and Italy and the company reported revenues of approximately €100 million in 2009. The acquisition has also provided Teva with access to a late-stage oral contraceptive, NOMAC/E2, which is currently under regulatory review in Europe.

Per the terms of the deal, Teva will also have the right to distribute Theramex's products in certain countries including Spain and Brazil. At the time of announcing the agreement, Teva had said that it would make a payment of €265 million to Merck Serono in addition to payments on the achievement of certain performance-based milestones.

We are positive on the acquisition which not only diversifies Teva's product portfolio but also gives the company access to Theramex's sales force and R&D capabilities.

Neutral on Teva

We currently have a Neutral recommendation on Teva, which is supported by a Zacks #3 Rank (short-term “Hold” rating). While we expect the company to continue performing well thanks to new product launches, both generic and branded, we remain concerned about the intense competition and pricing pressure in the generics market. Moreover, the Copaxone patent challenge remains a matter of concern. With Copaxone contributing more than 20% to total revenues in 2009, the entry of generic versions would be a major setback for the company.