Teva could jump into pharma's deal frenzy, CEO says

A few months ago, Teva ($TEVA) CFO Eyal Desheh told the J.P. Morgan Healthcare Conference that armed with a new incoming CEO and a reasonable debt level, the Israeli company was ready to make some deals. So with an M&A wave taking the pharma industry by storm, where is Teva in the melee?

Teva CEO Erez Vigodman

According to helmsman Erez Vigodman, Teva is looking to refocus on its generics business and get into the thick of the biosimilars race. But that doesn't mean a deal is out of the picture.

"While the focus remains on fixing the foundation and driving organic growth, we are aware of the opportunities around us, including potential larger transactions as long as they meet clear criteria, and we might engage in such a transaction once conditions admit," he said on a call with investors, as quoted by Seeking Alpha.

As far as conditions go, Desheh told shareholders Thursday that financial leverage was improving. The company's debt to EBITDA ratio improved to 2.04 from 2.18 in the year-ago quarter, he said; earlier this year, he cited the company's reduced debt level when proclaiming Teva's ability to make "a move which is more than a small acquisition."

And as far as where those deals may come, Vigodman said Teva was "fully aware of the opportunities around us" when it comes to biosimilars, noting that "We will be considering inorganic opportunities in order to be positioned better."

The generics arena--where Teva saw a 17% rise in U.S. revenue last quarter--has also been ripe for consolidation as of late, a factor that in February had analysts predicting that the industry's big four--Teva, Mylan ($MYL), Actavis ($ACT) and Novartis' ($NVS) Sandoz--could become three in the not-too-distant future. But a couple of months ago, some saw Teva potentially on the other side of that coin.

"What you're seeing is the company being revalued on the fact that there's a new CEO, the board will become smaller and more strategically focused, and they will deliver cost savings," Maxim analyst Jason Kolbert told Bloomberg in February. "That combined with the M&A activity is causing a revaluation in Teva."

- read the call transcript from Seeking Alpha
- see Reuters' take

Special Reports: Top 10 Generics Makers by 2012 Revenue - Teva

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