Teva Pharmaceuticals - A Deal Too Far?

Teva Pharmaceuticals (TEVA) is officially in crisis mode. Just a year after it completed the purchase of Allergan's (NYSE:AGN) generics business, Teva is under real financial pressure. As the narrative is clearly negative and could continue to remain under pressure for some time to come, I think it might be too early to go bottom fishing, as it's too late in the game to short as well. While Teva's new CEO will have a daunting task ahead, it's noteworthy that the board seems to understand the severity of the situation, which means that I'll be watching the developments with great interest.

Becoming the Largest Generic Drug Producer

Teva Pharmaceuticals has become a leading generic drug producer, in part fueled by a consistent dealmaking spree. Deals pursued by the Israel-based company include the 2006 acquisition of IVAX in a $7.4 billion deal, and the company bought Barr for a similar amount in 2008. Dealmaking continued coming out of the crisis as Teva bought Ratiopharm for $5 billion in 2010 and Cephalon for $6.8 billion a year later. In the years that followed, Teva announced several deals running in the hundreds of millions, until it bought Auspex for $3.5 billion in 2015. In all, it's safe to say that the company spent over $30 billion to make these deals, up to the point at which it announced the $40.5 billion purchase of the generic drug business of Allergan back in 2015.


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