The acquisition of Pliva by Barr Labs for cUSD2.2bn (nearly 50% of Barr’s market capitalization) should not have a negative impact on Zentiva, at least in the near short term as Pliva already competes with some of Zentiva’s products in the CEE markets. Barr’s 73% of 2005 sales came from generic products while key generic drugs are oral contraceptives and Warfarin Sodium – anticoagulant for patients with heard disease and/or risk of stroke. During the call on the acquisition, Pliva failed to give more details about Barr’s strategy in Europe except for synergies in the bio-generics R&D and production of drugs with relatively high entry barrier. The call did not elaborate what drugs would Barr plan to push in the CEE markets via Pliva and/or whether Pliva would behave more aggressively in its core markets.
Our view: While Barr’s entry in Pliva may eventually result in a higher competition for Zentiva, its impact should be limited in the near-term due to potential patent registration processes, etc. Also, Barr’s strategy is not clear yet and therefore we see the news as neutral at the moment. We believe that Gedeon Richter, due to its product portfolio, may be potentially more exposed to Barr’s entry into Pliva and hence the CEE markets.