Competitive Intelligence

Mylan Labs Acquires King Pharmaceuticals for $4 Billion = $3.3 Million Per Salesperson

Necessity always the mother of invention, Mylan continues to try and smooth out its business cycle by further expanding its portfolio of branded drugs with its $4 billion stock swap acquisition of King Pharmaceuticals, makers of the successfully marketed hypertension drug, Altace. The key asset here is the salesforce itself, except that, at $3.3 million per salesperson, that’s a steep premium if it’s all they were after.

King's flagship product is Altace, which is used for hypertension and cardiovascular protection. Altace had sales of about $446 million for the 12 months ended March 31.

Generic drug companies such as Mylan, Teva Pharmaceuticals, Forest Laboratories and others have seen their sales surge as employers try to cut soaring health care costs. Yet many of those sales were driven by the expiration of patents on high-margin branded pharmaceuticals, which will slow considerably in the coming years as fewer patents expire.

Mylan and other generic companies are trying to smooth out that boom-bust cycle by filling their portfolios with branded drugs.

King Pharmaceuticals has pushed aggressively into the branded market and has a division devoted to the acquisition of name brands and companies. Perhaps most important to Mylan, however, is access to King's 1,200-person sales force, which successfully marketed Altace.

Whether the King portfolio successfully fends off other generic competitors or even is able to pass SEC muster following a Medicaid pricing scandal, Mylan just upped the ante in its bet to take branded products to market more quickly with a stronger salesforce by bringing a downtrodden acquisition target back to life.

- Arik

Posted by Arik Johnson at July 26, 2004 10:51 AM | TrackBack