International reach gained through a controlling interest in Indian drug manufacturer Matrix would afford Mylan Laboratories an offshore lead in developing ANDAs, the firm's CEO said Aug. 28.

By "going after opportunities well in advance [of]... when we are allowed to look at those products in the [U.S.] we will be well ahead of the game in terms of filing our ANDAs because of the difference of laws," Mylan CEO Robert Coury told investors during a conference call to announce the deal.

Under conditions of the agreement, Matrix and its European subsidiary Docpharma would retain their current management teams. "Matrix really bolts by Mylan's side, rather than any overlap," Coury stressed.

Coury called the arrangement the first of its kind between an American and an Indian company. The purchase price is expected to be approximately $736 mil. Under the proposal, Mylan will acquire up to 71.5% of Matrix shares: 51.5% are to be purchased pursuant to an agreement with selling shareholders, and up to an additional 20% of the shares would come from an "open offer," similar to a U.S. public tender.

Coury said that Mylan's purchase of controlling interest in Hyderabad-based Matrix would allow the generic drug manufacturer to establish a global platform, in part through Belgium-based Docpharma, a distributor and marketer of branded generics in Belgium, the Netherlands and Luxembourg that was acquired by Matrix last year.

"We've identified a lot of products in our own portfolio that would do quite well in the European landscape, and we've also identified a lot of products in the Docpharma portfolio that we believe we can enhance here and introduce...in the [U.S.]," Coury said.

Coury said the deal also would give Docpharma "the muscle and firepower to compete" on a level with generic giants Sandoz and Teva.

Mylan's move into vertical integration and what the company called enhanced supply chain capabilities is the most recent example of compression in the generics industry in response to pricing pressures. In January, Teva became the world's largest generic drug manufacturer when its acquisition of generics producer Ivax was approved (¹ Also see "Teva Could Modify Its "Authorized" Generic Policy Following Ivax Acquisition" - Pink Sheet, 25 July, 2005.).

Matrix owns the world's second largest number of drug master files, with over 165 active pharmaceutical ingredients in the market or under development, Mylan said.

Coury said he looks at acquiring Matrix' active pharmaceutical ingredients base as both an offensive and a defensive protection. "From a defensive point of view it allows us to [match competitive prices] and extend our life cycle on that shelf...and from an offensive point of view, it gives us an opportunity to increase gross margins."

Mylan withdrew a bid to acquire King in February 2005 after negative investor reaction and financial restatements by King (² Also see "Mylan's Pursuit Of King Ends; King Says It's Ready To Go It Alone" - Pink Sheet, 28 February, 2005.).

- Shirley Haley (s.haley@elsevier.com)

Mylan's Purchase Of Matrix Will Speed Launch Of ANDAs

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