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