Is Teva knocking on Mylan's door? With inversion deal at risk, maybe

Teva and Mylan merge? Rumors are certainly swirling--and not for the first time, either. But while a potential deal might make financial sense, at least one analyst doesn't see it happening.

According to Wells Fargo's Michael Faerm, investors shouldn't listen to the latest chatter bubbling up on Wall Street. As Israeli newspaper Globes reports, Faerm figures that picking up a generic drugmaker won't solve Teva's ($TEVA) growth problems, which have come into the spotlight over the past year as a court ruling put top product Copaxone's sales in jeopardy.

Then, there's the question of whether Mylan's ($MYL) even interested in selling. The Pennsylvania company had been scouting around for acquisitions of its own before striking a $5.3 billion deal to buy a big chunk of Abbott Laboratories' ($ABT) drug business in July. And since then, it's reportedly been in talks for portfolios of off-patent meds from companies like Sanofi ($SNY) and GlaxoSmithKline ($GSK). Just last month, it agreed to pay $300 million for blood thinner Arixtra--a GSK castoff picked up by South Africa's Aspen last year--and its authorized generic in the U.S.

But on the other hand, that Abbott deal may ultimately be a a casualty of new anti-tax inversion rules; some industry-watchers say it's the deal most at risk. And a Mylan buy would fit with some of Teva's recently laid-out objectives. Earlier this year, CEO Erez Vigodman stressed a return to the company's core generics business and desire to bolster its presence in emerging markets and become a contender in the biosimilars space.

Mylan just happens to be a top generics contender--with a biosimilar of Roche's ($RHHBY) Herceptin on the Indian market, to boot. And it has plenty of emerging-markets heft, too, what with last year's nabbing of India-based Agila Specialties and a recent team-up with Gilead ($GILD) to help roll out megablockbuster-in-the-making Sovaldi in 91 developing markets.

As Globes points out, it's not the first time there's been speculation that a deal could go down between the two companies--or between Teva and another buyer, for that matter. Serial acquirer Valeant ($VRX) has been name-dropped, too, but CEO J. Michael Pearson's deal machine currently has its hands full with a hostile bid for holdout Allergan ($AGN).

While the Israeli drugmaker has stayed mum on deals as of late, it did announce results of a strategic review of its core therapeutic areas Monday. The company plans to zero in on its CNS and respiratory divisions, jettisoning 14 pipeline projects as it scales back in oncology and women's health. In those businesses, Teva will restrict its focus to late-stage prospects and lean on the commercial side with new deals or partnerships.

- get more from Globes
- read Teva's release

Special Report: Top 10 generics makers by 2012 revenue - Teva - Mylan

Suggested Articles

Turns out Procter & Gamble didn’t want Pfizer’s consumer health unit after all. But it did want Merck KGaA’s.

Private equity firm, in exclusive talks with Sanofi, says it'll invest to pump up Zentiva into an "independent European generics leader."

With suitor Takeda circling Shire, the Dublin-based target has pulled off a deal of its own.