Processing Magazine

Watson Pharma to buy Arrow group for $1.75 billion

June 17, 2009
Watson Pharmaceuticals Inc. announced it would buy smaller generic drug maker Arrow Group for $1.75 billion in cash and stock, getting access to a promising drug candidate pipeline and new markets, reported by the Associated Press. Watson of Morristown, N.J., said the combined company would have about $3 billion in annual revenue and do business in more than 20 countries. The company expects the transaction to close later this year, pending review by regulators, and add to its profit in 2010. It said privately held Arrow is one of the fastest growing generic drug companies, with $647 million in sales in 2008. Arrow owns the U.S. rights to the authorized generic version of Pfizer Inc.''s cholesterol drug Lipitor, which is the best-selling brand-name drug in the world. The generic is expected to reach the market in November 2011.
Watson reported $2.54 billion in revenue last year, and expects about $2.65 billion this year. The deal includes $1.05 billion in cash and $500 million in stock, or 16.9 million shares worth roughly $29.51 each, along with $200 million in preferred stock. The boards of both companies approved the deal. Arrow shareholders may receive additional payments based on sales of generic Lipitor. Arrow has about 1,000 employees, including about 250 working in research and development, and Watson expects to keep most of the Arrow workers. The company does business as Arrow Generics in the U.K., Cobalt Pharmaceuticals in the U.S. and Canada, and Arrow Generiques in France. It owns production facilities in Brazil, Canada, and Malta, and has a research and development facility in Australia.