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Mylan Laboratories (MYL) is the third largest manufacturer of generic pharmaceuticals in the United States.^[1] Until 2007, MYL was a relatively small player in a market dominated by giants Teva and Sandoz, Novartis' generics division. Mylan lacked its competitors' economies of scale and couldn't compete as effectively on price. The company also had limited international exposure, with only $3 million (less than 1% of total sales) in revenue coming from Europe in 2006.

In 2007, however, MYL made two transformational acquisitions. It acquired Merck's generic business, effectively doubling its revenues and giving it a significant presence in fast growing European generics market. Earlier in the year, MYL also acquired, a controlling interest in Matrix, an Indian pharmaceutical ingredients manufacturing firm, significantly expanding its manufacturing capacity while lowering its manufacturing costs. The downside to these acquisitions is that they were mostly funded by debt, and the interest expense associated with them, combined with the cost of integrating the two acquisitions, the Merck business in particular, will depress margins until 2009 ^[2].

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