Watson Pharmaceuticals ($WPI) is already one of the world's biggest genericsmakers. But in a high-volume, low-price business, getting even bigger could mean lower costs. And that, in turn, means more freedom to compete on price and, potentially, bigger margins.
So, if Watson does clinch a deal for the Swiss-based generics player Actavis, it won't just vault upward in the industry rankings. It could also help Watson jostle for market share with big rivals like Teva Pharmaceutical Industries ($TEVA) and Sandoz, the Novartis ($NVS) generics unit, Reuters points out.
If Reuters' sources are correct, Watson is sliding downhill toward an Actavis buyout, with an announcement possible by the end of April. The price is expected to come in a bit lower than previously reported--€4.5 billion rather than €5 billion or even €5.5 billion. That's around $6 billion.
It's a big deal for Watson, whose previous buyouts have been about one-third that size. But as Reuters points out, combining the two companies could allow for significant cost cuts.
- read the Reuters news