November 29, 2023

DealBook: Takeda in Talks to Buy Nycomed for Up to $14 Billion

The Takeda Pharmaceutical Company of Japan is in talks to buy the Swiss drug maker Nycomed for 8 billion to 10 billion euros, or about $11 billion to $14 billion, a person with direct knowledge of the matter said on Thursday.

A deal with Nycomed would bolster Takeda’s presence in treatments for gastric, respiratory and inflammatory disorders. The Swiss pharmaceutical company has a presence in 70 countries, with Europe accounting for 50 percent of sales and emerging markets 38 percent.

Since taking the helm at Takeda in 2003, Yasuchika Hasegawa, its chief executive, has been active in gaining footholds in technologies and markets through acquisitions and alliances.

After a flurry of smaller purchases, Takeda acquired the American biotechnology company, Millennium Pharmaceuticals, in 2008 for $8.8 billion, the largest foreign acquisition ever by a Japanese pharmaceutical company.

An acquisition of Nycomed would top that deal, and make it the third-largest overseas purchase by a Japanese company, behind Japan Tobacco’s purchase of Gallaher in 2007 and Softbank’s acquisition of Vodafone’s Japan unit in 2006.

Takeda’s approach has provided a blueprint for other Japanese drug companies, most of which remain small and inefficient compared with their much bigger American and European rivals. Even Takeda, Japan’s biggest drug maker, had annual revenue of just 1.4 trillion yen ($17 billion) last year, about a quarter of Pfizer’s $68 billion.

Since then, other Japanese drug makers, including the Daiichi Sankyo Company and Astellas Pharma, have also actively pursued overseas acquisitions.

Takeda said on Wednesday that net profit slumped 17 percent in the fiscal year that ended in March, its bottom line hurt by the expiration of patents on its ulcer drug, Prevacid, and the strength of the yen. The company faces the loss of patent protection this year on another top-selling brand, the Actos diabetes drug.

“We will continue to pursue the acquisition of rights to drugs in late-stage development and the acquisition of companies,” Mr. Hasegawa told reporters.

Nycomed’s sales are getting crimped by expiring patents, too. It has lost patent protection in several countries on its biggest product, Pantoprazole — a drug sold in the United States as Protonix that inhibits the production of acids in the stomach. Last year, worldwide sales of the product declined 27.8 percent.

The company is looking to Daxas, a treatment for chronic obstructive pulmonary disease, to help make up some of the lost revenue. The drug, which has been approved in the European Union and Canada, has been introduced in four European countries.

Still, Nycomed reported 3.2 billion euros in revenue last year, down 2 percent from 2009. The company posted a loss of 229.1 million euros in 2010, compared with a profit of 232.7 million euros a year earlier.

The person close to the deal said that Deutsche Bank was advising Takeda on the purchase of Nycomed, a closely held company based in Zurich. The private equity firm Nordic Capital owns 41 percent of Nycomed, Credit Suisse’s private equity arm DLJ Merchant Banking owns 26 percent and Coller International Partners nearly 10 percent.

Nordic Capital has owned parts of Nycomed on and off since 1999. In 2002, Nordic sold the drug maker to a group of investors led by DLJ Merchant Banking and Blackstone, and three years later bought back a controlling stake. At the time, Nycomed was valued at 1.8 billion euros.

Nycomed, which was founded in Norway and relocated to Denmark before moving its headquarters to Zurich, is lead by Hakan Bjorklund, a Swedish executive and neuroscientist that Nordic hired to lead the company when it first invested in 1999.

No agreement has been reached and the talks may end without a deal, the person said. The news was earlier reported by Bloomberg News.

Representatives of Nordic, Credit Suisse, Coller, Deutsche Bank and Nycomed declined to comment.

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