Teva Expands in Latin America - Analyst Blog

In order to strengthen its presence in Latin America, Teva Pharmaceutical Industries Ltd. (TEVA) recently announced its intention to acquire Peruvian company Corporación Infarmasa.

With this acquisition, Teva will gain access to Infarmasa's portfolio of more than 600 products, of which over 500 are currently marketed, as well as its development pipeline and manufacturing facilities. Infarmasa specializes in the manufacturing and development of branded and unbranded generic drugs, mainly corticosteroids, antihistamines, analgesics and antibiotics.

The deal should allow Teva to strengthen its position in the antibiotics market in Perú. Teva already has a presence in Perú through its unit - Corporación Medco.

This deal is in-line with Teva's strategy of expanding its operations especially in Latin America. The Peruvian pharmaceutical market, which grew at a CAGR of 12% from 2005 to 2010, is expected to reach $1.8 billion in 2015.

Earlier in January, Teva 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. The company entered into a definitive agreement with Merck Serono, a division of Merck KGaA (MKGAF).

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.