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Teva: $500 Million Cost Savings From Cephalon Buy 'Very Conservative'


By Thomas Gryta, Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- Teva Pharmaceutical Industries Ltd.'s (TEVA, TEVA.TV) projected cost savings from its $6.8 billion acquisition of Cephalon Inc. (CEPH) are "very conservative," the generic drug maker's chief financial officer said Wednesday.

Israel-based Teva, which trumped a hostile offer from Valeant Pharmaceuticals International Inc. (VRX) in agreeing to buy Cephalon earlier this week, has projected cost savings of at least $500 million in the third year after the deal. That estimate assumes that Teva makes no changes to its current research and development projects after the deal, even though it plans to conduct a review of those efforts, Teva CFO Eyal Desheh said at a Deutsche Bank conference in Boston.

Desheh reiterated that the cost savings will come from various areas as he provided details on Teva's plans after the deal's expected closing in the third quarter.

About $200 million will come from selling, general and administrative expenses, about $130 million will come from combining the sales and marketing organizations of the two companies, and another $120 million will come from combining research and development infrastructure and management.

The last $50 million in savings will be in manufacturing, Desheh said, because Cephalon'sEurope-based generic arm outsources its production. Teva plans to use excess capacity acquired in its $5 billion deal for German generic-drug company Ratiopharm last year.

-By Thomas Gryta, Dow Jones Newswires; 212-416-2169; [e-mail]

(END) Dow Jones Newswires
05-04-111330ET
Copyright (c) 2011 Dow Jones & Company, Inc.

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