Stada must join the generics buyout binge, CEO says

Stada CEO Hartmut Retzlaff has finally admitted that his company needs to eat or be eaten. The German genericsmaker has been resisting the industry's consolidation trend, but Retzlaff has now told shareholders that it can no longer opt out. It has to make some deals.

Stada's fellow generics firms have been joining forces to take advantage of economies of scale at a time when top-selling drugs are falling off patent by the handful. Capitalizing on that opportunity requires enough capacity to turn out big-selling meds at high volume and low cost. Yesterday, Teva ($TEVA) cited manufacturing capacity as one reason it's choosing not to launch a version of Pfizer's ($PFE) behemoth cholesterol pill Lipitor.

"In the face of this, we, too, want to and have to complement organic growth through acquisitions," Retzlaff said at the company's annual general meeting (as quoted by Reuters). In the meantime, Retzlaff said, the company may hit its job-cutting target of 800 ahead of schedule, if it can sell two plants in Russia.

Stada's new resolve follows Watson Pharmaceuticals' ($WPI) $5.6 billion deal for rival generics maker Actavis Group. But that's just the biggest recent example of M&A in the generics sector. Earlier this month, Novartis' ($NVS) generics unit, Sandoz, inked a $1.53 billion deal for Fougera, Nycomed's former U.S. business, which specializes in dermatology products, for $1.53 billion. And Takeda just agreed to buy a Brazilian generics and OTC maker, Multilab, for $264 million.

Stada has also been a takeover target itself. Reuters recently reported that the company has rebuffed interest from generics giant Teva, Watson Pharmaceuticals and Pfizer.

- read the Reuters news