In the bigger-is-better world of generic drugs, Mylan (Nasdaq: MYL) is moving up the ladder with the purchase of privately held Bioniche Pharma.

The company is based in Ireland, but Bioniche gets most of its revenue from the U.S. Bioniche will fill a niche for Mylan -- handy, considering its name -- helping it expand into the injectable generic drugs market. Injectable drugs are typically harder to make than pills, which often results in less competition and higher margins. Pfizer (NYSE: PFE) has also moved into the space, although the drug giant did so through licensing rather than acquisition.

Mylan is paying $550 million cash, and it won't be assuming the company's debt or acquiring its cash. That's a pretty rich enterprise value, considering Bioniche only had $130 million in sales over the last year. For comparison, here's the EV/Revenue ratios for the other primary players in the generic space:

Company

Enterprise Value/LTM Revenue

Bioniche

4.2

Mylan

2.0

Teva Pharmaceuticals (Nasdaq: TEVA)

3.6

Par Pharmaceutical (NYSE: PRX)

0.7

Watson Pharmaceuticals (NYSE: WPI)

2.2

Source: Capital IQ, a division of Standard & Poor's. LTM=last 12 months.

Mylan must think Bioniche can grow into the value, and it may be right. Last quarter, Bioniche had sales of about $43.5 million. Project that out for a full year, and we're down to an EV/revenue ratio of 3.2. Still not a steal, but considering the company has 15 Abbreviated New Drug Applications pending with the Food and Drug Administration, and 25 more drugs in development, revenue will likely head higher. Sometimes you've got to pay for growth.

Mylan says the purchase will add to earnings in the first year -- and that's before any synergies are found.

Management has a pretty good track record of effective integration after its mammoth merger with Merck KGaA's generic-drug business. I think this smaller one will go just as smoothly.