Reports: Novartis Looks to Buy German Generic Drugmaker

Local reports claim that Swiss drug major Novartis intends to buy a generic drugmaker in Germany, and the company is allegedly in negotiations with the country's second-largest producer, Hexal AG.

Both companies deny that any talks are in progress, although if Novartis were to purchase Hexal, which is valued at some US$4bn, it could gain a leading position in Germany's generics market. The Swiss drugmaker's existing generics subsidiary Sandoz and any new operations could substantially outsell Ratiopharm, the current market leader.

However, Sandoz is reported to be underperforming in Germany, with 2004 sales totalling EUR98mn (US$125.01mn), or only about a 10th of Ratiopharm's revenue last year. Meanwhile, as the government seeks to cut the country's drug spending, the drive towards lower-cost drugs represents a substantial opportunity for generics makers. Further, the local generics industry association has claimed that the sector's three leading players are beginning to form an oligopoly, controlling over 50% of the market in 2004.