IHS Global Insight Perspective | |
Significance | The deal encompasses the entire prescription drug business including key drugs such as Actonel (risedronate sodium) and Enablex (darifenacin) as well as manufacturing facilities and drug pipeline. |
Implications | The acquisition expands Warner Chilcott's presence in the drugs market with presence in 14 countries and strengthens its drug development capabilities. |
Outlook | The deal is expected to be completed in the short term catapulting Warner Chilcott into a US$3.3 billion firm in terms of revenues. The transaction is indicative of a consolidative phase in the pharmaceutical market. |
Warner Chilcott (U.S./U.K.) have entered into an agreement with Procter & Gamble (P&G; U.S.) to buy the latter's pharmaceutical business for an upfront cash payment of US$3.1 billion, inheriting over 40 drugs in the prescription drug segment. The deal will see Warner Chilcott inherit the following:
- Manufacturing facilities in Puerto Rico and Germany.
- 2,300 employees.
- 40 prescription drugs including osteoporosis drug Actonel (risedronate), Asacol (mesalamine) delayed-release tablets for ulcerative colitis, and co-promotion rights to Enablex (darifenacin) indicated for overactive bladder.
- Strengths in three therapeutic areas—musculoskeletal, gastrointestinal, and women's health.
The pharmaceutical division of P&G registered revenues of US$2.3 billion and profits of US$540 million for the year ended 30 June 2009, providing a very small premium to Warner Chilcott with the ultimate US$3.1-billion price tag. However, Warner Chilcott will benefit from the current alliances and outlicensing deals, namely, co-development and co-promotion deals with Novartis (Switzerland) for Enablex in the United States; development and commercialisation of Actonel with Sanofi-Aventis (France); development of transdermal testosterone products for women with Watson Pharma (U.S.). In terms of outlicensing, the firm has tied up with Ajinomoto (Japan) for developing and marketing Actonel for osteoporosis in Japan, Dainippon Sumitomo Pharma (Japan) for Didronel (etidronate disodium), and with Taigen (Taiwan) to develop P&G-discovered experimental antibiotic. The deal is subject to regulatory and shareholder approval.
Outlook and Implications
The acquisition provides a huge boost to Warner Chilcott, which in effect could be part of a bigger league of pharma companies. The firm faced some competition in acquiring P&G Pharma from Cerberus Capital Management (U.S.). While the price tag of US$3.1 billion seems to be a small premium, it is reflective of the limited prospects for P&G Pharma's blockbuster drugs. The majority of P&G Pharma's sales come from just four drugs—Actonel (risedronate), Enablex (darifenacin), Asacol (mesalamine), and Intrinsa (testosterone).
For P&G, the move has been strategically well-positioned. The firm first made a decision to divest from the business earlier this year, and proceeded to stop all investments in research and development since then. The firm announced plans to shift its research focus to consumer health and concentrated on plans to maximise the value of its pharmaceutical assets. In a significant step towards this endeavour, the firm sold its development and marketing rights in Japan for its drug Actonel to its partner Ajinomoto last month, signalling moving closer to a bigger deal exiting the pharmaceutical business altogether.
For Warner Chilcott, the deal significantly expands presence in specific therapeutic areas as well as geographically. The firm specialises in women's healthcare and dermatology, with products such as Doryx (doxycycline), Loestrin 24 Fe (ethinyl estradiol/norethindrone), femhrt (ethinyl estradiol/norethindrone acetate), Ovcon (ethinyl estradiol-norethindrone) and Sarafem (fluoxetine). The deal also increases its production capabilities, adding to its facilities in Fajardo, Puerto Rico, and Larne, Northern Ireland.
Related Articles
- Japan - United States: 31 July 2009: P&G's Actonel Japanese Rights Acquired by Ajinomoto
- United States: 24 July 2009: P&G in Talks to Sell Prescription Drug Business
- United States: 17 February 2009: New Acquisition Targets Emerge as P&G Decides to Exit Pharma Business