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Teva Pharmaceutical Industries, an Israeli generic drug manufacturer, will purchase Barr Pharmaceuticals. The two companies announced the agreement Friday morning.
Teva is the world's largest generic drug manufacturer and Barr is the fourth largest. Barr owns Barr Laboratories, in Forest. With 570 employees, the company is Bedford County's largest non-public employer and, county officials note, is a major contributor to the county's tax base.
"We are assuming it will have very little impact," Sue Montgomery, the county's director of economic development, said of the acquisition. "They are proceeding with their expansion effort."
In January, Barr announced an expansion plan that consists of two phases. The company received a $2 million incentive grant consisting of both state and local money for the project.
"That's under a performance agreement," said Montgomery. "If they don't [meet the agreed performance] they have to pay it back."
Montgomery said that all incentive grants contain a "claw-back" clause. Grants are also dispersed in installments. The performance agreement with Barr calls for a $30 million investment and the creation of 120 jobs.
The Forest facility is a major part of Barr's operations. According to Charlie Mayr, a spokesman for Barr, it's their national distribution site, in addition to being a major manufacturing facility.
"So, all ships through Forest," Mayr said.
"We are a complimentary product line," Mayr commented, stating that there is very little overlap between what Barr makes and what Teva produces.
Along with Barr's generic products, the acquisition greatly expands Teva's proprietary products. Currently, Teva produces three proprietary brands while Barr manufactures 27. In all, the acquisition will give Teva 450 products.
"The combined business in the U. S. will be very significant," Mayr said.
Barr, according to Mayr, has focused on products that had barriers to their entry into the generic market. Some products have gone off patent, but are hard to make. Barr has focused on these. Another of Barr's specialties, one that Teva also shares, is successfully challenging patents. Mayr said that Barr's focus on barrier products is why there is so little overlap between its product line and Teva's.
There are still some steps that need to be completed before the deal becomes final. Mayr said that Barr's shareholders must approve the purchase. The deal also requires approval by regulatory authorities in the United States and the European countries where Barr operates. Mayr said the company expects the deal to be complete at the end of this year or the beginning of 2009.
"We are not slowing down or stopping until the transaction is over," Mayr said concerning the expansion project in Forest.
What happens when the transaction is completed?
"We assume Teva will recognize the value of that facility," Mayr said. "It's a major manufacturing facility for us and it is the major distribution center for us."
The acquisition "will further enhance Teva's leadership position in the U. S. and will significantly strengthen its position in key European and Central and Eastern European markets," stated a news release on Teva's Web site.
"The companies' highly complimentary product offerings and development pipelines will extend Teva's generic and proprietary offerings for customers globally," it further stated.
Shlomo Yanai, Teva's chief executive officer stated in the press release that the acquisition will enhance Teva's market share in the U. S. and key global markets.
The deal will cost Teva $7.46 billion. Teva will also assume a net debt of $1.5 billion. Based on the two companies 2007 performance, the combined company would have had revenues of $11.9 billion.