Watson Pharmaceuticals, Inc. completed the acquisition of Actavis Group. “Actavis,
Inc.” is a leading integrated global specialty pharmaceutical company
engaged in the development, manufacturing, marketing, sale and distribution
of generic, branded generic, brand, biosimilar and over-the-counter (“OTC”)
pharmaceutical products.
Prescription pharmaceutical products in the U.S. generally are marketed as
either generic or brand pharmaceuticals. Generic pharmaceutical products are
bioequivalents of their respective brand products, or in cases of protein-based
biologic therapies, biosimilar, and provide a cost-efficient alternative to
brand products. Brand pharmaceutical products are marketed under brand names
through programs that are designed to generate physician and consumer loyalty.
Through our Anda Distribution Segment, we distribute pharmaceutical products,
primarily generics, which have been commercialized by us and others, to pharmacies
and physicians’ offices. As a result of the differences between the types
of products we market and/or distribute and the methods we distribute these
products, we operate and manage our business as three distinct operating segments:
Actavis Pharma, Actavis Specialty Brands and Anda Distribution. The Company
also develops and out-licenses generic pharmaceutical products through its Medis
third-party business.
We apply three key strategies to achieve growth for our Actavis Pharma and
Actavis Specialty Brands pharmaceutical businesses: (i) internal development
of differentiated and high-demand products, including, in certain circumstances,
challenging patents associated with these products, (ii) establishment of strategic
alliances and collaborations and (iii) acquisition of products and companies
that complement our current business. We believe our three-pronged strategy
will allow us to expand both our brand and generic product offerings globally.
Our Medis third-party business has a broad portfolio of over 200 developed products
for out licensing to approximately 300 customers, primarily in Europe. Our Anda
Distribution business distributes products for over 260 suppliers and is focused
on providing next-day delivery and responsive service to its customers. Our
Anda Distribution business also distributes a number of generic and brand products
in the U.S. Growth in our Anda Distribution business will be largely dependent
upon FDA approval of new generic products in the U.S. and expansion of our base
of suppliers.
Customers
In our Actavis Pharma and Actavis Specialty Brands operations, we sell our generic
and brand pharmaceutical products primarily to drug wholesalers, retailers and
distributors, including national retail drug and food store chains, hospitals,
clinics, mail order, government agencies and managed healthcare providers such
as health maintenance organizations and other institutions. In our Anda Distribution
business, we distribute generic and certain select brand pharmaceutical products
to independent pharmacies, alternate care providers (hospitals, nursing homes
and mail order pharmacies), pharmacy chains, physicians’ offices and buying
groups.
Competition
The pharmaceutical industry is highly competitive. In our Actavis Pharma and
Actavis Specialty Brands businesses, we compete with different companies depending
upon product categories, and within each product category, upon dosage strengths
and drug delivery systems. Such competitors include the major brand name and
generic manufacturers of pharmaceutical products. In addition to product development,
other competitive factors in the pharmaceutical industry include product quality
and price, reputation and service and access to proprietary and technical information.
It is possible that developments by others will make our products or technologies
noncompetitive or obsolete.
Competing in the brand product business requires us to identify and bring to
market new products embodying technological innovations. Successful marketing
of brand products depends primarily on the ability to communicate their effectiveness,
safety and value to healthcare professionals in private practice, group practices
and receive formulary status from managed care organizations. We anticipate
that our brand product offerings will support our existing areas of therapeutic
focus. Based upon business conditions and other factors, we regularly reevaluate
our business strategies and may from time to time reallocate our resources from
one therapeutic area to another, withdraw from a therapeutic area or add an
additional therapeutic area in order to maximize our overall growth opportunities.
Our competitors in brand products include major brand name manufacturers of
pharmaceuticals. Based on total assets, annual revenues and market capitalization,
our Actavis Specialty Brands segment is considerably smaller than many of these
competitors and other global competitors in the brand product area. Many of
our competitors have been in business for a longer period of time, have a greater
number of products on the market and have greater financial and other resources
than we do. If we directly compete with them for certain contracted business,
such as the Pharmacy Benefit Manager business, and for the same markets and/or
products, their financial strength could prevent us from capturing a meaningful
share of those markets.
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