Generic drugmaker Mylan agreed to pay Abbott Labs $5.3 billion in stock to acquire part of its international generic drug business in a deal that vastly spreads the geographic reach of the Pennsylvania-based firm.

The agreement gives Mylan market access in Europe, Japan, Canada, Australia and New Zealand to more than 100 specialty and branded-generic drugs, including branded-generic versions of Androgel (testosterone gel), Amitiza (lubiprostone) and Creon (pancrelipase). Mylan also will acquire two of Abbott manufacturing facilities in France and Japan.

Mylan expects all of the assets will generate roughly $1.9 billion a year in additional revenue.

The company appears to be catching up to other large drugmakers who have for years been pushing branded generics — which are generic drugs marketed under a brand name — in emerging markets, experts say.

“Mylan has some presence overseas, but I don’t think it is a large presence by relative comparison to the companies doing these deals for a number of years,” Edward Buthusiem, consultant with Berkley Research Group and former general counsel to GlaxoSmithKline’s R&D and vaccine divisions, said.

In Europe and other international markets, drugmakers will often sell branded generics because customers have a higher brand loyalty than in the U.S., he said.

Mylan is following other drugmakers that often acquire firms in emerging markets such as Brazil or Russia to take advantage of their existing government relationships, and distribution and packaging apparatus. This makes it easier for the drugmakers to introduce their own branded generics into a new market or take over existing products, Buthusiem said.

Drugmakers have been pursuing this strategy for years, especially as U.S. drug approval times have lengthened and the domestic market became more competitive, he said.

Under the deal, Mylan also plans to re-incorporate from Pittsburgh to the Netherlands to get a more favorable corporate tax rate. Mylan currently pays a rate of roughly 25 percent. This rate is expected to lower to 20 to 21 percent in the first full year after the deal finalizes, and to the high teens thereafter, spokeswoman Nina Devlin said.

For its part, Abbott gets a 21 percent stake in the new Mylan. Abbott said that it plans to eventually sell its stake in the new venture to fund other opportunities.

The agreement also lets Abbott focus on faster growing emerging markets, said Larry Biegelsen, senior analyst with Wells Fargo, in a Monday investment note. “We estimate that emerging markets will account for about half of total Abbott sales once this deal closes,” he said.

The deal is expected to close by the first quarter of 2015, Mylan said. — Robert King

Originally appeared in Drug Industry Daily, the pharmaceutical industry’s number one source for regulatory news and information. Click here for more information.