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The Allure Of Impax


Clarification: This column should have made clear that Impax Laboratories was one of three companies that could make sense as possible acquisition targets in the generic industry, according to Merrill Lynch's Gregory Gilbert. Also, the column should have noted that Gilbert's reference was based on a report Gilbert published and e-mailed to Marcial entitled "Generic M&A -- Don't Get Carried Away," not an interview. The report stated separately that three companies, Barr, Ivax, and Impax could make "attractive acquisition targets," and in a separate bullet point that Teva "has historically been one of the more active acquirers in the sector."

As excitement wanes from Novartis' (NVS) buy of generic outfits Hexal and Eon Labs, who's next? The buzz says Impax Laboratories (IPLX), whose generics use a controlled-release technology. "Impax' pipeline is impressive. So it's valuable as a stand-alone or as a buyout," says Robin Manners West of New Mexico's State Investment Council, which owns shares. In December, its generic of depression remedy Wellbutrin SR was approved. In February, its Ditropan XL for urinary incontinence got a tentative O.K. It has 16 applications pending, with five tentatively approved. Who'll pursue Impax? Some say Israel's Teva Pharmaceutical Industries (TEVA). Gregory Gilbert of Merrill Lynch (MER), which has done banking for Teva, says a buy would put Teva back on top in generics. West notes Impax and Teva work together on 12 generics. Impax, now at 17, is worth 26 in a buyout, she says. Wachovia Securities' Michael Tong sees 2005 results of 91 cents a share, vs. 2004's estimated 29 cents. Teva declined comment. Impax did not return calls.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial


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