How Mylan NV (NASDAQ:MYL) And Other Pharma Derive Benefits M&As?

Mergers and acquisitions form a part of all industries and so does the pharmaceuticals. These companies however, tend to start generating larger revenues through these M&As. Mylan NV (NASDAQ:MYL), recently acquired the generic business and markets speciality (the non-US developed) of Abbott Laboratories (NYSE:ABT).

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Diversified product portfolio and geography

Likewise, Actavis plc (NYSE:ACT) has seen a growth in terms of inorganic and organic structures. What Actavis is enjoying today is a position made through a range of M&As. The reason is that when the Pharma companies tend to enter into such accords, they can diversify not just their product portfolio, but also the geography. Actavis, for example, has the Pharma assets which are valued at over $120 billion, since 2011, and all these are the acquired assets.

Depending upon its revenue value, Actavis is the largest generic pharmaceutical business in the U.S. This is followed by Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA). Teva benefited by acquiring Allergan, Inc. (NYSE:AGN). This merged company is estimated to bring out the pro forma revenues worth over $23 billion in this year.

The new products addition

One of the major benefits of these acquisitions is access to various new products. The complex generics become very attractive because of higher margins. By acquiring the companies with diversified products, the existing company increases its market value and the margin from the drugs. Bio-similar, drugs for rare diseases and complex treatments are highly attractive. Also, the acess to other kinds of drugs like controlled release and modified release drugs is highly lucrative for the Pharma companies.

Access to the new market

Apart from the expansion of their portfolio, the Pharma companies can also enjoy entry into new markets. For example, Actavis group’s acquisition of Specifar Pharmaceuticals, Ascent Pharmahealth Ltd. and Furiex Pharmaceuticals Inc (NASDAQ:FURX) has given it access to the drug market in Europe, Southeast Asia and Australia as well as Japan, respectively. Mylan also has the access to non-U.S. markets through other acquisitions.

Other benefits to these companies come through lower structure of the corporate tax. By changing their headquarters in the acquired companies, these U.S. Pharma companies can enjoy lower corporate tax.

About the Author

John is a special projects and general assignment reporter, noted for breaking several exclusive stories.

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