Ranbaxy and Actavis are two potential bidders vying for Merck KGaA's generics drug unit, an acquisition that would solidify either company as the third largest generics drug maker in the world.

Darmstadt, Germany-based Merck KGaA announced it was considering the divestiture of its generics unit Jan. 5 after completing the acquisition of Serono. The generics business operates in more than 90 countries and generates sales of $2.32 billion, making it the number three global player behind Teva and Sandoz.

In an interview with "The Pink Sheet" DAILY, Gurgaon, India-based Ranbaxy confirmed its interest in Merck. While a cornerstone of Ranbaxy's development strategy includes organic growth, the company noted, "the second component is acquisitions that would add to our capabilities, that would expand our technologies or add scale. Merck is one of those companies that would fulfill those requirements."

Ranbaxy generated sales of $1.34 billion in 2006. The company has been a steady acquirer of smaller generic firms, like Be-Tabs, the fifth largest branded generics company in South Africa, which it bought in December. The firm closed seven other transactions last year.

Actavis is also reportedly interested in bidding for Merck. The acquisition would make up for the company's failed $2.5 billion bid for Pliva last year. The Reykjavik, Iceland firm was ultimately outbid for Pliva by rival Barr (¹ Also see "Door Opens For Barr To Acquire Pliva As Actavis Bows Out Of Bidding War" - Pink Sheet, 18 September, 2006.).

Since then, Actavis has been busy on the acquisition front, albeit in much smaller deals. The firm recently bought the U.S. generics and delivery technology company Abrika Pharmaceuticals for roughly $65.9 million and acquired a majority stake in the Russian drug manufacturer ZiO Zdorovje for around $60.3 million (² Also see "Actavis Acquires U.S. Generics, Delivery Technology Firm Abrika" - Pink Sheet, 30 November, 2006.).

Actavis is forecasting revenue of roughly $1.8 billion in 2006, although financials will not be reported until March.

- Jessica Merrill (j.merrill@elsevier.com)

Generic Drug Firms Look To Bulk Up With Addition Of Merck KGaA’s Generics Unit

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