Watson Creates Third-Largest Generic-Drug Company With Actavis Buy

Watson Pharmaceutical’s purchase of Actavis firmly positions it as one of the top generic-drug makers in the world, giving it access to Asian and European markets it didn’t have before.

In a terribly kept secret that was leaked earlier this month, Watson purchased the privately held Icelandic company for $5.6 billion, a deal officially announced late Wednesday. The move creates the third-largest generic company in the world with anticipated revenue of $8 billion in 2012.

Joining forces should save more than $300 million in three years, mostly in administrative and R&D costs, Watson noted. Actavis generated $2.5 billion in revenue in 2011 and has roughly 300 projects in its pipeline.

Picking up Actavis provides Watson with growth opportunities after 2013, and before biosimilars growth is expected to emerge later this decade, Davis said. Watson has inked a $400 million development deal with Amgen for oncologic biosimilars.

This deal underscores changes to the way pharma companies do business. The old paradigm — where one company develops, markets and sells a product — is gone for good. Today, licensing, joint ventures and acquisitions are increasingly the way businesses operate.

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