UPDATE: Teva Buys Japanese Generics Maker Taiyo

Teva Pharmaceutical Industries Ltd. (TEVA) Monday said it had acquired a 57% stake in Japan's third-largest generic drugs maker for $460 million in cash, significantly boosting its presence in the country.

The deal, which gives privately held Taiyo Pharmaceutical Industry Co. Ltd. an enterprise value of $1.3 billion, includes an offer to buy all the remaining shares in the company.

Teva, the world's largest producer of generic drugs, said it expects the acquisition to add to earnings within four quarters of the deal closing, which it expects by the end of the third quarter. It will pay for it with a mixture of cash and bank debt.

Taiyo posted sales of $530 million in 2010. It has a portfolio of over 550 generic drugs in various therapeutic areas.

"This acquisition will enable Teva to deliver on our strategic objective of becoming a leading player in the fast-growing Japanese generics market. In fact, we now expect to reach our 2015 target of $1 billion in sales in Japan ahead of schedule," Teva Chief Executive Shlomo Yanai said in a statement.

"Japan is the second-largest pharmaceutical market in the world, valued at $96 billion in 2010 with a relatively low rate of generic penetration of 23%. The Japanese government has expressed its intention to increase generic penetration to 30% by 2012," the company added.

The Israeli company has been expanding aggressively recently.

Earlier in May, it announced a deal to acquire U.S. specialty drug maker Cephalon Inc (CEPH) for $6.8 billion, to boost its presence in branded drugs. In March, Teva unveiled a joint venture with Procter & Gamble Co. (PG) that combines their over-the-counter drug businesses outside North America, projecting sales of up to $4 billion by the mid to later part of the decade. Last summer it bought German drug maker Ratiopharm for $5 billion.

The U.S. remains Teva's main market, accounting for half of its revenue, but the company wants to expand its exposure in markets with higher growth potential, and Monday's announcement reflects that aim.

Teva last week said first-quarter profits rose 7%, as strength in Europe and emerging markets help offset weakness in North America where generic drug sales were hit by a lack of new launches and manufacturing issues.

The company wants to reduce its reliance on Copaxone, its leading branded treatment for multiple sclerosis, which faces increasing competitive threats.

Last month, the company reported positive data on its oral multiple sclerosis treatment laquinimod, developed by Sweden-based Active Biotech (ACTI.SK), which may provide a foothold in the emerging market for oral MS treatments while also helping dilute the dependence on Copaxone's profits.

-By Sten Stovall, Dow Jones Newswires; 44-20-7842-9292; [e-mail]