US-based pharma major Mylan is showcasing its experience in India and its approach to emerging markets with its anti-AIDS drugs to drive home differences with Teva. At a Bank of America-Merrill Lynch Healthcare conference held on May 13, Mylan CEO Heather Bresch, responding to a question on culture and industrial logic when dealing with corporate mergers, drew upon these to emphasise how Mylan differed with Teva and was in sync with the Ireland-based Perrigo, a company Mylan has been trying to acquire.
Mylan, valued at over $7 billion, is strongly resisting an unsolicited $40 billion bid by Israel-based Teva to acquire Mylan. But on the other hand, it is also pursuing its own $32.7 billion bid to acquire Ireland-based maker of cough and cold remedies. This development comes at a time when there is a clear move towards consolidation in the global markets, be it the generic players joining forces or the US pharmacy benefit managers which are seen as intermediaries between pharma companies and insurers. One line of argument in favour of the Teva-Mylan deal is that if it were to happen, it could create a pharma giant and leverage the benefits of size. But Mylan argues that size alone does not matter and is raising the issue of the need for a cultural fit and industrial logic, which it argues is missing in a deal with Teva but possible with Perrigo.
Bresch, who described her company as "a global company with local presence" and Teva as "a local company with a global presence," said, "Integrating companies for us is more than words on a sheet of paper or more than an excel spreadsheet. It's truly about integrating the companies that we have acquired and building upon it." Referring to the acquisition of Matrix in India (Mylan acquired it 2007 for $736 million), she said, "Rajiv Malik was the CEO of Matrix, he's now the president of our entire organisation. We've grown our operations. Half of our employees are in India, half of our operations (are also in India-in an apparent reference to the number of units the company has in India)."
Matrix Laboratories, which is now Mylan Laboratories in India, has grown from a total income of Rs 822.7 crore in March 2007 to Rs 7,556.8 crore in March 2014 (source: CMIE Prowess).
Pointing out that for the company, "it wasn't about trying to dabble in India and do business in India from the United States," she said, in contrast Teva does not "hide the fact that they're very centric to Israel, (they are) very centric to everything having to be located there... when you look at their integrations and what they've acquired over the last 10 years... the lack of really getting the most out of those assets is why we say there's not a cultural fit; it's just our approach to the business, our approach to people and our approach to really building a great global organisation."
Speaking to Business Today over phone without getting into details of the transactions with Teva or Perrigo, Mylan President Rajiv Malik, said, "Strategically, we remain committed to India. We have a critical mass there with close to 13,000 employees, over 20 facilities (half of total Mylan facilities) and it is a base for emerging markets especially in meeting in the healthcare needs in emerging market geographies like Africa with HIV and other drugs." Mylan seems to pride itself in being active in the competitive tender driven geographies with its low-margin product categories, with the company often pointing out that "nearly 50 per cent of people living with HIV/AIDS in the developing world who are receiving treatment depend on a Mylan product, all of which are produced in India."
According to a company spokesperson, Mylan spends Rs 450 to Rs 500 crore every year on R&D in India. That apart, it has spent about Rs 2,000-2,500 crore on capex over last six years in India. This is in addition to inorganic investments like Agila, Famycare, buying facilities from SMS and Unichem. Last year, in an interview to Business Today, Malik had said that Mylan had focussed on India also as a market since 2012. "For the India market, every year we are adding two new verticals, starting with HIV in 2012, followed by women's health care and oncology, and, going forward, respiratory and gastrointestinal segments," he had said.