Pfizer may sell its stake in Latin America's largest manufacturer
- Pfizer is considering the sale of its 40% share in a Brazilian generics joint venture, Laboratório Teuto|Pfizer, with a long list of potential buyers, including Teva, Mylan, India-based Sun Pharmaceuticals and three buyout firms, Reuters reports.
- Pfizer bought its share in 2010 for $240 million from the owner, Walderci de Melo. Pfizer was given an option to eventually acquire the entire company, but differences in opinions are leading Pfizer to opt out, which opens up room for other buyers.
- Brazil is the largest economy in Latin America with a thriving generics drug industry, which generated roughly $14 billion last year and has enjoyed a period of sustained growth, including a 10% year-over-year growth rate between 2014 and 2015.
Although none of the players have disclosed whether they are actually potential buyers, Pfizer and the Melo family, which continues to own 60% of the company, hired Goldman Sachs and Grupo Pactual to oversee the deal.
Despite the fact that Brazil has the world's largest generic drug industry, its ongoing economic challenges and weak currency have decreased the incentive to stay for companies like Pfizer and Sanofi, which have taken up joint ventures with local companies in the country.
So what's in it for the other companies?
Yesterday Teva moved one step closer to completing its $40.5 billion acquisition of Allegan's generic drugs unit when U.S. regulators cleared the deal. The upshot of this is that the largest generics company in the world will soon have an even larger worldwide presence, and about $25 billion more in cash over the next three years thanks to the deal.
Teva's scale and reach would allow it to leverage its resources to stay afloat in the tumultuous Brazilian market, while still solidifying its presence in the Latin American generics market.
As for Mylan, which is in the process of closing a $7.2 million acquisition deal with the Swedish generics firm Meda, participating the the Laboratório Teuto joint venture makes sense because it already has a strong presence in Brazil, in addition to other markets throughout Latin America.