Citi believes that the acquisition of Peru's Corporacion Infarmasa by Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) is part of an acquisition campaign by the company in Latin America. The bank reiterates its "Buy" recommendation for Teva.
Citi estimates that the acquisition of Corporacion Infarmasa will add $50-60 million to Teva's international generics sales in 2011. Citi also estimates the acquisition price of the company, one of Peru's top ten drug companies, at $250- 300 million.
Citi believes that Teva can easily fund the acquisition from its cash on hand. Citi also does not expect the acquisition to have a material impact on its earnings per share estimate of $5.32 for Teva in 2011, reflecting a 16% increase over 2010.
This acquisition, combined with Teva’s existing presence in Peru (through its Corporación Medco subsidiary), makes Teva the second largest pharmaceutical company in the country. Citi analyst John Boris says, "We expect Teva to remain focused on growth in Latin America and believe additional deals are in the pipeline. On July 6, 2010, Teva announced it would eliminate the Teva International Group and restructure its geographical divisions to realign North and South America as a single division, under the leadership of Teva Americas President and CEO Bill Marth, emphasizing its commitment to Latin America. We expect Mr. Marth to selectively acquire assets in Latin America."
Corporacion Infarmasa manufactures and markets branded and unbranded generics, primarily corticosteroids, antihistamines, analgesics, and antibiotics, with the number 1 marketed antibiotic. It has a portfolio of 600 registered products (500 of which are marketed), providing Teva with a manufacturing facility in Lima and a development pipeline.
Published by Globes [online], Israel business news - www.globes-online.com - on January 27, 2011
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