Sector News

Settling a post-buyout hangover, Allergan gives Teva a $700M remedy

February 2, 2018
Life sciences

Teva and Allergan have put aside their differences—and the result is an influx of cash that Teva badly needs.

Wednesday, the former deal partners inked an agreement to settle a dispute over the amount of working capital that changed hands when Teva took over Allergan’s generics unit last year. Allergan will fork over $700 million, and Teva says it’ll use that money to repay some of the debt it incurred with that disastrous $40.5 billion buy.

Back in November, the embattled Israeli drugmaker noted that the final cash consideration from its $40.5 billion buyout of Allergan’s generics unit was in need of tweaking. As a starting point before heading into arbitration, Teva suggested Allergan hand over $1.4 billion. Meanwhile, the Israeli company cautioned investors in a financial filing that the amount it eventually received “could be significantly lower than the amount submitted.”

That turned out to be the case in the final settlement. But while Teva will only receive half the sum it desired, it can definitely put the $700 million to use. Since the Allergan pickup—which proved to be devastating, thanks to buyer consolidation that’s forced generics prices down—Teva has struggled hard, and the mountain of debt it incurred with the buyout has made things even more complicated. In November, easing the debt burden became extra difficult as credit rating agency Fitch cut Teva’s rating to junk.

New CEO Kåre Schultz, though, has a plan he’s confident can get the company back on track, if a controversial one. In December, Teva announced 14,000 job cuts it said would help it save $3 billion per year.

Allergan, meanwhile, isn’t exactly in peak shape, either. Last month, to prepare for potential generic competition to blockbuster Restasis, it slashed 1,400 jobs of its own. The move, execs said, would help the company save between $300 million and $400 million off the operating cost total it rung up in 2017—or, in other words, about half the bill it now owes Teva.

By Carly Helfand

Source: Fierce Pharma

comments closed

Related News

September 25, 2022

Rise of the machines: Novo Nordisk pledges $200M to create first quantum computer for life sciences

Life sciences

Big Pharma has long seen the potential for AI and machine learning to accelerate drug development. But Novo Nordisk is going a step further by channeling $200 million toward the creation of a computer that will outrun anything in existence.

September 25, 2022

Mount Sinai AI uncovers new brain analysis method to predict dementia, Alzheimer’s disease

Life sciences

Current methods for diagnosing Alzheimer’s disease rely on a complex combination of self- and caregiver-reported symptoms, a physical examination and either a PET scan or a spinal tap to look for evidence of amyloid plaque build-ups in the brain. But a new artificial intelligence-based method may make the diagnostic process a much more objective one.

September 25, 2022

New AstraZeneca-backed report finds big money behind diverse owners and entrepreneurs in Europe

Life sciences

There is lots of talk about diversity and inclusion in business, including in pharma and medtech. A new report by the Open Political Economy Network (OPEN), a think tank focusing on migration and diversity, released its “Minority Businesses Matter: Europe” report highlighting the successes and challenges of ethnic minority-owned businesses in Europe.