Mylan's Acquisition of Matrix

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Case Details:

Case Code : BSTR279
Case Length : 20 Pages
Period : 2005-2007
Pub Date : 2008
Teaching Note :Not Available
Organization : Mylan, Inc./ Matrix Laboratories Ltd.
Industry : Pharmaceutical
Countries : USA; India; Global

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"This is an extremely complementary transaction that accomplishes a number of Mylan's key objectives. Mylan is executing on its commitment to establish a global platform and expand its dosage forms and therapeutic categories. Additionally, this acquisition deepens Mylan's vertical integration and enhances its supply chain capabilities. The transaction will allow Mylan and Matrix to strengthen and expand their core businesses and competencies, while creating significant opportunities for global expansion and growth."¹

- Robert J Coury, Vice Chairman and CEO, Mylan Inc. in 2006.

"A player has to decide how he can stay in the field for as long as possible. Matrix, as a significant API supplier, needed a bigger playing field. Partnering with Mylan gives us that."² , ³

- Nimagadda Prasad, Executive Chairman, Matrix Laboratories Ltd. in 2006.

"Clearly, we're seeing a trend in the industry toward acquisitions and consolidation... This is a continuing trend to move more sourcing and manufacturing overseas and to own it as opposed to just contracting it."⁴

- Martha Freitag, an industry analyst at Argus Research Corp.⁵, in 2006.

Benefits Beyond Global Expansion

Mylan Inc. (Mylan), one of the largest US generic drug⁶ makers, acquired a 71.5 percent stake in Matrix Laboratories Ltd. (Matrix), India, a leading API supplier, globally in January 2007 for a cash and stock deal of US$736 million. The Mylan-Matrix deal was the largest acquisition in the Indian pharmaceutical industry and was viewed by analysts as a step toward backward integration for Mylan.⁷

On completion of the deal, Robert J Coury (Coury), Vice Chairman and CEO of Mylan, said, "Today's announcement marks the successful closing of the transformational Matrix transaction, and it also marks the beginning of a new era at Mylan where our organization is continuing to

expand beyond our well-established position as a leading domestic generic pharmaceutical company toward our objective of establishing Mylan as a world leader in generics and specialty pharmaceuticals."⁸

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1] "Mylan Laboratories to Acquire Up to 71.5% Controlling Interest in Matrix Laboratories,"www.matrixlabsindia.com, August 28, 2006.

2] API (acronym for Active Pharmaceutical Ingredients), also known as bulk drugs, are active chemicals used in the manufacturing of drugs.

3] Gina S Krishnan, "Matrix Unloaded,"www.businessworldindia.com, September 11, 2006.

4] "Mylan Laboratories Mylan to Have Majority of India's Matrix,"www.advfn.com, August 29, 2006.

5] Argus Research Corp. is an independent research firm.

6] Generic drugs (or Generics) are either copies or the basic form of a proprietary drug (or "brand-named") drugs produced by large multinationals. For example, Lipitor is the brand names for the drug Atorvastatin that was patented by Pfizer Inc. Any other drug with the same composition manufactured and marketed by other companies is called generics.

7] Surojit Chatterjee, "Mylan Buys Majority Stake in India's Matrix Lab for $ 736 Million,"www.in.ibtimes.com, August 30, 2006.

8] "Mylan Laboratories Inc. Completes Matrix Laboratories Limited Transaction,"www.devicespace.com, January 9, 2007.