Novartis Buys Hexal, Seizes Generic Market

The Swiss pharmaceutical group Novartis said Monday it had bought the German firm Hexal and its US counterpart Eon Labs in a $5.65 billion (€4.33 million) takeover deal. Novartis hopes to combine the geographical spread and marketing power of its existing generics arm, Sandoz, with Hexal's product development ability and its position in Germany as the second largest generics market, as well as Eon's specialization in complex generics manufacturing. Thus, Novartis intends to become "the global leader" in generics -- cheaper non-branded medicines where the patent rights have lapsed -- following the takeover with combined sales of $5.1 billion, based on 2004 data. The company further stated it would launch a tender to buy the remaining stake in Eon at $31 per share, which is equivalent to about $989 million for the package of 31.9 million shares. It is aiming for cost savings through synergies of $200 million within three years of finalizing the overall cash deal, and half within a year.