Barr Wins Balkan Battle

Barr Pharmaceuticals (BRL) is planning to pay $2.2 billion for Croatian generic-drug maker Pliva, an acquisition that will enable it to significantly expand into European markets.

"We've been almost exclusively a U.S. [market] company," said Bruce Downey, chairman and CEO of Barr, in a conference call with analysts and investors. Buying Pliva "will accelerate the growth of Barr," giving it access to more than 30 markets as well as an extra $600 million in annual sales. The combined company would have sales of $2.5 billion.

By midmorning, Barr's stock was off 74 cents, or 1.5%, to $48.03.

Barr won a bidding contest among several companies, the most visible being Iceland's Actavis Group, which had been courting Pliva since mid-2005. The Actavis bid of $1.6 billion was deemed too low by Pliva's management.

The international cast of characters underscores how the generic drug industry is both expanding across borders and consolidating. Actavis has made a few acquisitions in the U.S. One of the most aggressive U.S. companies in international markets was Miami-based Ivax before it was acquired by Israel's Teva Pharmaceutial Industries (TEVA), the world's largest maker of generics.

Teva and the Sandoz unit of Switzerland's Novartis (NVS) have been trading places as the world's biggest generic-drug company thanks to acquisitions. Also in the U.S., Watson Pharmaceuticals (WPI) is in the process of buying Andrx(ADRX), whose shareholders are scheduled to vote on the deal Wednesday.

For Barr, the best-case scenario could lead to a closing in October for Pliva, an 85-year old company based in Zagreb, Croatia, which also has two subsidiaries in the U.S. The agreement must be approved by the Federal Trade Commission, along with regulators in Croatia and Germany.

Downey said Barr likes Pliva for more reasons that access to foreign markets. Pliva's facilities for different drug-delivery technologies, including creams and ointments, as well as its manufacturing capabilities for creating generic versions of biotechnology drugs, were key selling points, Downey said.