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The Deal: Actavis Extends Gains Following Warner Deal

"We trace our origins to 1856. We began our history as a generic company and then reformed ourselves into a specialty pharma company," Warner Chilcott president and CEO Roger Boissonneault said on the call.

"We expect to enhance our combined company's credit profile and for debt to remain investment grade," Bisaro added on the call, explaining that the increased cash flows brought in from the deal will enable the combined company to manage its debt load.

Actavis specialty brands president Fred Wilkinson explained that the buyer will enter into new areas for its core women's health market in particular. "We add a couple of core areas in women's healthcare we've been evaluating for several years," he said. Also, "we enter into the osteoporosis and hormone replacement therapy business."

The deal also adds gastroenterology, urology and dermatology franchises and additional sales infrastructure, Wilkinson explained.

Warner and Actavis together will rank third in terms of specialty product sales, ranking behind Teva Pharmaceutical Industries Ltd. and Forest Laboratories Inc. The combined business has 25 total development projects in its pipeline, 15 of which are focused on women's health.

"Paul [Bisaro] had a goal to get us to over a billion dollars in specialty drug [sales]. This single transaction takes us to $3 billion," Wilkinson said.

The global women's health market in 2010 was valued at $23.3 billion, with a compound annual growth rate, or CAGR, of 4.2%. It is forecast to reach $32.8 billion by 2016 at a CAGR of 5.9%, according to Dublin consultancy and market analysis firm Research and Markets. Hormonal contraceptives and osteoporosis treatment are the two largest classes.

Warner has six contraceptive products either approved for use or in development, versus Actavis' two, according to an investor presentation by Actavis discussed during the conference call.

Warner hit the block in April 2012 and was working with Goldman Sachs Group Inc. on its review.

Meanwhile, Actavis in recent months has been seen more as a potential target than a buyer, reportedly receiving takeover interest from companies including Mylan Inc., Valeant Pharmaceuticals International Inc. and Novartis AG.
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