Novartis to Buy Generics Firms for $8.3 Billion

Novartis said Monday that it would buy generic-drug makers Eon Labs Inc. of the United States and Hexal of Germany for a total of $8.3 billion in cash.

The Swiss pharmaceutical giant said integrating the two companies into its Sandoz division would create the world’s largest generic-drug company.

The move also positions Sandoz for growth in the United States once millions more people qualify for Medicare prescription drug benefits in January under a change approved by Congress at the end of 2003.

Novartis said it would buy all of privately held Hexal and the two-thirds of Eon Labs that the German company owns for roughly $7.3 billion. Novartis also expects to spend close to $1 billion for the remaining shares of Laurelton, N.Y.-based Eon. The company will offer $31 each for the remaining Eon Labs shares, which closed Friday at $27.92 on Nasdaq.

With the acquisitions, Sandoz would supplant Israel’s Teva Pharmaceutical Industries Ltd. as the largest company specializing in generic versions of drugs that have lost patent protection. Teva had sales of $4.8 billion last year.