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Novartis clinches Lek deal

Lek shareholders have succumbed to Novartis's overtures

The Swiss pharmaceutical firm, Novartis, has succeeded in its bid to take control of the Slovenian drug company, Lek.

Novartis confirmed that more than half of Lek's shares had been tendered in the Swiss company's takeover offer.

The Swiss firm wants Lek because of its strong position in generic drugs - cheap versions of drugs which have lost patent protection.

The market for cut-price medicines is expanding fast as countries try to cut healthcare costs, and Novartis lacks the capacity to manufacture such drugs in quantity.

The Swiss firm has had an uphill struggle trying to acquire Lek. After an initial rebuff, it raised its bid price by ten per cent to value the company at $860 million (SFr1.3 billion), or 105,000 Slovenian tolars ($447) per share.

The deal came together last week, when the company's main shareholders, Kapitalska Druzba (KAD) and Odskodninska Druzba (SOD), which together hold a 27.5 per cent stake in Lek, decided to accept the increased offer.

Lek's chief executive said last week that 65 per cent of the shares had been tendered after Novartis upped the bidding price.

Antibiotic

A key drug that Lek will manufacture for is the Augmentin antibiotic, developed by British drug giant, GlaxoSmithKline.

"The main reason why we want to take over Lek is that the company is very established on the generics market - an area in which Novartis is not that present," said Novartis spokesman, Felix Raeber, in a recent interview.

"This is purely a generic deal, which means drugs that are no longer under patent protection."

swissinfo with agencies

Key facts

Lek shareholders finally accepted Novartis's offer after the Swiss firm raised the bid price.
Novartis wants Lek because of its ability to manufacture generic drugs.
The market for cheap drugs is growing rapidly as governments try to cut health costs.

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