Teva Pharmaceutical Industries will buy Merck KGaA's women's health unit Theramex for €265 million ($367.8 million) to strengthen its women's health franchise outside the United States.

Israel-based Teva, the world's biggest maker of generic drugs, entered the women's health business when it acquired U.S. rival Barr in December 2008 for $7.5 billion.

Steven Tepper, an analyst at Harel Finance brokerage, said this deal was a small but positive one for Teva, which has indicated in the past it wants to expand in women's health.

"Women's health is not progressing the way they want," he said. "They realise there are certain flaws in the current business they bought from Barr and this is meant to expand their business."

The deal will bring Teva not only new products but also a marketing platform in Europe and elsewhere, he said.

This is the company's second acquisition in Europe this year, following its purchase of generic drugmaker Ratiopharm for €3.7 billion to boost its presence in Germany.

Theramex had 2009 revenue of €100 million, a significant portion of which was in France and Italy.

Teva will also have distribution rights for Theramex products in certain countries such as Spain and Brazil. Its pipeline includes a new oral contraceptive based on natural estrogens, which successfully completed phase III clinical studies and was submitted for approval in Europe.

Generic Competition
Gilad Alper, an analyst at the Meitav brokerage, said women's health sales at Teva fell 9% in the first half of 2010 due to the launch of generic competition to its Plan B "morning after" contraceptive pill.

"Teva is acquiring to boost organic growth," Alper said. "This could point to a wider problem for the company -- a decline in Teva's ability to grow organically."

Pricing pressures, slow generic growth in Europe and oral competition to Teva's top-selling multiple sclerosis treatment Copaxone are weighing on organic growth, he added.

Teva President and Chief Executive Shlomo Yanai said Theramex's product portfolio, sales force and promising pipeline will be combined with the research and development capabilities and product portfolio of Teva's U.S. women's health business.

Merck will be eligible to receive certain performance-based milestone payments from Teva.

Teva will fund the acquisition from its internal resources. The deal is subject to regulatory approval and is expected to close towards the end of this year or in early 2011.