Japan's largest drugmaker Takeda Pharmaceutical is in talks to buy privately-held Swiss rival Nycomed for more than $12 billion in a bid to extend its global reach into Europe and emerging markets, according to sources with direct knowledge of the matter.
The purchase would offer the mainly Asia and US-focused maker of drugs for diabetes and heart disease access to a lung disease drug, Daxas, just approved in the United States, and a portfolio of over-the-counter consumer products.
Broadening Takeda's horizons and revenue base is something analysts said was key to its future success and could explain a hefty suggested price tag of more than $12 billion.
"The suggested price looks high, but in the sector M&A is starting to happen and there are not enough companies to buy," Kepler Capital Market analyst Tero Weckroth said. "Mid-cap pharma is a real sweetspot for M&A."
Credit Suisse analyst Fumiyoshi Sakai said Takeda "has to survive as a global player. It's not in a position to go backwards."
Nycomed is well placed to deliver in faster-growing markets and says emerging markets made up nearly two-fifths of revenue in 2010 and should make up 60 per cent of sales by 2015. Emerging markets sales leapt 30 percent last year.
A Nycomed deal would be Japan's second-biggest overseas takeover according to Thomson Reuters data - after Japan Tobacco's $19 billion buy of British rival Gallagher - and would be a second major deal for Takeda after it bought US cancer drug specialist Millennium Pharmaceuticals in 2008 for about $9 billion.
One person familiar with the matter said the deal is in its final stages although it may take time to conclude. The sources did not want to be identified as they were not authorised to speak to the media. Takeda and Nycomed both declined to comment.
Nycomed has around 12,500 employees and had revenue of €3.2 billion in 2010, generating adjusted earnings of €851 million before interest, taxes, depreciation and amortisation. It has four research and development centres in Europe and India, 15 production facilities and two joint ventures in 13 countries.
The Swiss firm is majority owned by four private equity firms, led by Nordic Capital with a 41 per cent. Credit Suisse's DLJ Merchant Banking has 25.6 per cent, Coller International Partners 9.7 percent and Avista 8.9 per cent.
Its lung drug roflumilast, known as Daxas in Europe and Daliresp in the United States, is the first drug in a new class of treatment for chronic obstructive pulmonary disease, a common breathing disorder often caused by smoking.
After some delays it won US approval in March where Forest Laboratories has the marketing rights. In Europe, Merck & Co has marketing rights.
Japanese drugmakers, including Daiichi Sankyo and Astellas Pharma, have been pursuing acquisitions to boost growth as they face the loss of patent protection on key medicines.
Takeda has previously unsuccessfully explored takeovers of other European drugmakers including Organon, ultimately sold by Akzo Nobel NV in 2007 to Schering Plough, and Sweden's Meda AB, two people familiar with those talks said.
Reuters
