Takeda takes on transformation

Japanese pharma acquires European footprint with $13.7 billion purchase of Switzerland-based Nycomed

Amy Swinderman
ZURICH, Switzerland—Setting its sights on high-growth,emerging markets in Europe, Japanese pharma Takeda Pharmaceutical Co. Ltd. hasacquired Nycomed AS, a privately owned pharma based here, for $13.7 billion ona cash-free, debt-free basis.
  
Takeda, which has a strong presence in Japan and the UnitedStates, was attracted to Nycomed's significant business infrastructure inEurope, and says that bringing Nycomed into its growing global fold will enableit to become "a truly global pharmaceutical company with a diversified talentbase capable of conducting global business effectively." That goal is part ofTakeda's "2011-2013 Mid-Range Plan (MRP)," a growth strategy aimed at enhancingthe company's regulatory development expertise and commercializationcapability.
 
 
Elaborating on the rationale for the acquisition, Elissa J.Johnsen, a spokeswoman for Takeda Pharmaceuticals North America Inc., says thestrategy also includes "expanding geographic coverage into markets with highergrowth, and enhancing Takeda's existing presence in each one of the countriesand regions."
 
"The acquisition of Nycomed enables Takeda to cover 98percent of the global pharmaceutical market," Johnsen adds. "It also brings toTakeda top-line growth and strong cash flow generation. Takeda is committed todiscovering innovative drugs and keeping its forecast and R&D spending overthe MRP plan. Additionally, given the
enhanced global marketing, sales and regulatory expertise ofthe combined company, Takeda becomes a much more attractive licensing partner."
 
 
Under the terms of the acquisition agreement, Nycomed willbecome a wholly owned subsidiary of Takeda. The transaction has beenunanimously approved by both companies' boards of directors, and subject toantitrust clearance, it is expected to close by the end of September.
 
Nycomed's long history of milestones dates back to itsfounding as Foundation of Nyegaard & Co. in 1874. Today, Nycomed ranks 28thamong global pharmaceutical companies, and its diverse product range focuses onbranded medicines in gastroenterology, respiratory and inflammatory diseases,pain, osteoporosis and tissue management. A range of over-the-counter productscompletes the portfolio. According to the company's website, new products aresourced in-house and in-licensed from external companies such as smallbiotechs. Nycomed counts Merck & Co. Inc. and Forest Laboratories as two ofits most important partners.
 
Currently, Nycomed has three Phase I programs indevelopment: A small-molecule PDE4 inhibitor for both inflammation andrespiratory conditions, as well as a monoclonal antibody for inflammation. TwoPhase II programs are underway: Veltuzumab for inflammation and rheumatoidarthritis and Saber-bupivacaine for incisional pain. Nycomed also has threePhase III programs in its pipeline: An alendronate effervescent forosteoporosis; teduglutide for gastroenterology and short bowel syndrome; andciclesonide HFA nasal for respiratory conditions and allergic rhinitis.
 
 
The acquisition doesn't include Nycomed's U.S. dermatologybusiness, which Takeda said didn't offer synergies with its own operations.
 
In 2010, Nycomed's total net turnover reached $4.6 billion,with an adjusted EBITDA of $1.2 billion.
 
 
"The combination of Takeda's successful track record ofinnovation with Nycomed's efficient commercialization and manufacturinginfrastructure will create a global player with a phenomenal ability to bringmedicines to patients and healthcare providers around the world," said HåkanBjörklund, CEO of Nycomed, in a statement announcing the deal. Nycomed deferredrequests for comment on the deal to Takeda.
 
 
Nycomed employs 12,500 associates worldwide and hasaffiliates in more than 70 countries. Research and development is conducted atthree sites in Europe and one in India. Nycomed also has 15 manufacturingsites: five centers in Europe for global products, as well as 10 productionsites for regional products in fast-growing countries such as Brazil andMexico. A major investment is being made in a new pharmaceutical plant inRussia, currently Nycomed's biggest single market. Takeda said it cannotcomment on how the acquisition will affect these employees and facilities untilafter the deal closes.
 
 
Many analysts have noted that both Takeda and Nycomed facelackluster development pipelines and increased competition from genericdrugmakers. This month, Takeda reported that earnings fell 17 percent in itslatest fiscal year, hurt in part by expiring patents on its ulcer drugPrevacid, while sales of Nycomed's biggest product, pantoprazole, fell 27.8percent last year. Overall, Nycomed reported a loss of $328 million in the lastfiscal year, compared with a profit of $332 million in the previous year.
Other analysts have been especially vocal about the deal'sprice tag, saying it may be overpriced, considering that some shareholders maybe getting nervous about recent high-figure deals.
 
"The target is appropriate if Takeda's main objectiveis to expand its reach in emerging markets. Even then, it does leave animpression that the price paid cannot be justified if it is only to secure asales channel," J.P. Morgan analyst Masayuki Onozuka told the Wall Street Journal.
 

 
Takeda and Lilly inkmarketing agreement in Asia
 
SEOUL, Korea—Takeda Pharmaceutical Company Ltd. alsoannounced last month that it has entered into an exclusive partnership with EliLilly & Co. to market Evista, an approved treatment for osteoporosis in postmenopausalwomen, in seven Asian markets.
 
 
Haruhiko Hirate, senior vice president of Takeda'sinternational operations, said in a statement that the company enhances its businessin Asia, "which is one of our main focus, by various initiatives includingstrengthening of sales structure. This partnership with Lilly offers thepotential for Takeda to accelerate our business in this region."
 
Under the agreement, the companies will market Evista inKorea, Hong Kong, Macau, Malaysia, the Philippines, Singapore and Thailand.Evista is approved and marketed for the treatment and prevention ofosteoporosis in postmenopausal women in these territories, and for breastcancer risk reduction in Philippines, Singapore and Thailand.
Marketing and distribution rights of Evista will betransferred to Takeda. Lilly will receive an unspecified cash payment fromTakeda. Lilly also retains patent ownership.
  
"This agreement is good for our customers, includingpatients and physicians, because Takeda intends to commit additional resourcesto support Evista in affected markets in Asia," said Eberhard Ludewigs, vicepresident of Lilly's Amerasia operations, in a statement. "The agreement alsoprovides Lilly guaranteed income and gives us the opportunity to invest furtherin diabetes, oncology and neuroscience."

Amy Swinderman

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