Warner Chilcott buys P&G’s pharma division for $3.1 billion

Warner Chilcott Ltd., the Ardee, Ireland-based maker of birth-control pills and acne medicine, announced recently it has reached an agreement to purchase Procter & Gamble Co.’s prescription-drug unit for an upfront cash payment of $3.1 billion.

Register for free to listen to this article
Listen with Speechify
ARDEE, Ireland—Warner Chilcott Ltd., the Ardee,Ireland-based maker of birth-control pills and acne medicine, announcedrecently it has reached an agreement to purchase Procter & Gamble Co.'sprescription-drug unit for an upfront cash payment of $3.1 billion.
The acquisition will give Warner Chilcott brandedmedications that include the osteoporosis drug Actonel, the bowel disordermedicine Asacol and co-promotion rights to the bladder-control treatmentEnablex.
According to Warner Chilcott CEO Roger Boissonneault, theacquisition will permit the company to expand its "presence in women'shealthcare, establish us in the urology market in advance of the anticipatedlaunch of our erectile dysfunction treatments and add gastroenterologytherapies to our product portfolio."
"The acquisition of the P&G pharmaceutical brands andemployee talent is a transformational, strategic move for us," Boissonneaultsays. "The acquisition transforms Warner Chilcott into a global pharmaceuticalcompany, expands our presence in women's healthcare, establishes us in theurology market in advance of the anticipated launch of our erectile dysfunctiontreatments, and adds gastroenterology therapies to our product portfolio."
Just the top drug that Warner Chilcott receives in the deal,Actonel, with more than $1 billion in annual sales, exceeds the company's 2008revenue of $938 million.
Warner Chilcott said it is borrowing the entire $3.1billion, in a senior unsecured bridge facility and a senior secured bankfacility, from JP Morgan Chase & Co., Bank of America Corp., Credit SuisseGroup, Morgan Stanley, Barclays PLC and Citigroup Inc.
"We view the fact that the company was able to go out andsecure financing commitments from a group of six high-quality financialinstitutions on what we believe are good terms and enable us to do this deal isquite an accomplishment, particularly in light of the way the market has beenover the last, let's say six to nine months or more," Warner Chilcott ChiefFinancial Officer Paul Herendeen says. "Right out of the chute, we expect thisto be accretive for our shareholders."
According to the companies, the majority of the 2,300 employeesworking for P&G's pharmaceitucals unit are likely expected to WarnerChilcott.
The transaction expands Warner Chilcott's business into 14new countries, and an unspecified number of Procter and Gamble's prescriptiondrugs in development, manufacturing facilities in Puerto Rico and Germany, atrained sales force of roughly 1,200 and a research and development team nearlyas big.
Bob McDonald, president and chief executive officer ofProcter & Gamble, extended a special thanks to P&G's pharmaceutical employees.
"These men and women have built a large and profitableglobal business which has improved millions of lives," he said. "Their welfarewas a key consideration in the choice of a buyer. We are deeply grateful tothem and are glad they'll be able to continue this work as part of anothergreat company."
P&G said it believes Warner Chilcott will be a strongerand better investor in P&G's pharmaceutical assets, brands and capabilitiesbecause of Warner Chilcott's focus to grow its pharmaceuticals business, versusP&G's decision to prioritize investments on its consumer healthcarebusinesses.
The deal comes as a number of large pharmaceuticalscompanies, including GlaxoSmithKline and Novartis, have increased investment innon-prescription consumer healthcare products as they seek to diversify fromthe uncertainties of new drug development while existing products come offpatent.
Immediately after the deal was announced, shares of WarnerChicott increased. Analysts also reacted favorably to the news.
"It gives them immediate scale. It gives them an R&Dfranchise, too," said analyst Les Funtleyder at Miller Tabak & Co.
Ali Dibadj, an analyst at Sanford C. Bernstein & Co. inNew York, points out that the
price of the transaction is at the low end of the $3 billionto $4 billion range that the analyst had forecast earlier this year.
"There is encroachment on (Procter & Gamble's) productsfrom generic drugs and other competitive products, which may have depressed theprice," Dibadj said.
Boissonneault indicated that the purchase will be "accretivefrom a cash net income perspective right out of the box, not in several years,"with Jeffries & Co. analyst David Windley speculating the deal could add$850 million in income for Warner Chilcott.

Subscribe to Newsletter
Subscribe to our eNewsletters

Stay connected with all of the latest from Drug Discovery News.

DDN July 2024 Magazine Issue

Latest Issue  

• Volume 20 • Issue 4 • July 2024

July 2024

July 2024 Issue