Watson and Andrex Merger
I found this article on the Miami Herald website interesting. The article deals with the proposed merger between Andrx and Watson Pharmaceuticals to form what would be the third largest generic manufacturer. On an amusing note, the paper has a section headline stating “FAA Inspection”. Now when I first read this I was scratching my head; why exactly was the Federal Aviation Administration doing an inspection of a pharmaceutical company?? Seems it’s a typo and should really be FDA. At first, I thought maybe Andrx had added an airport at the site.
It seems MMI investments who owns 12 percent of Andrx thinks the $1.9 billion price that Watson Pharmaceuticals has offered falls short of what Andrx is truly worth. The president of MMI states they although they have had their problems (the FDA has refused to review any more of Andrxs’ drug applications until certain problems are corrected at their ) it was better for Andrx to clean up itself before being put on the market. He draws the analogy to a trophy home hit by a storm and wouldn’t it be better to fix it up before putting it up for sale. Having spent some time in pharmaceutical development, I think the analogy falls short. Fixing quality issues takes more time and is harder to fix than remodeling a home.
My guess is that the quality control problems at the Davie, FL plant may be of greater concern than the company has publicly stated. While I have been lucky enough in my career to not have been in such a situation, I do know that it takes quite an effort to make changes, especially those involving corporate culture. Leaving out the question of price, I think a merger could produce a viable company. Both have been struggling of late.
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