Activist investor presses Par Pharma to sell itself

Par Pharmaceutical is the latest drugmaker to attract attention from an activist investor. This time, it's Ralph Whitworth, whose Relational Investors first upped its stake in the company--and then asked Par to put itself up for sale.

Par is a genericsmaker of modest size, with $271.5 million in first-quarter revenue. As blockbuster drugs fall off patent, creating opportunity for copycat companies, the generics industry is consolidating; taking best advantage of those opportunities requires scale, or so the idea goes.

Watson Pharmaceuticals ($WPI) put $5.9 billion behind that theory recently, when it agreed to buy Swiss-based Actavis. The Big Pharmas with generics operations have also been tacking on acquisitions here and there. Some of those buys were aimed at geographic reach and penetration--consider Sanofi's ($SNY) purchase of Laboratorios Kendrick in Mexico and Medley in Brazil--as drugmakers beef up in emerging markets. Other deals were aimed at gaining share of specialty markets, such as Novartis' ($NVS) recent purchase of dermatology generics specialist Fougera.

Analysts and investors have been pushing for other smallish genericsmakers--Germany's Stada, for one--to sell out. Stada has rebuffed recent interest from Big Pharma and bigger genericsmakers, Reuters recently reported, and analysts say the company doesn't have the critical mass to keep competing.

- see the Reuters story