Mergers, acquisitions, and restructuring - Pharmaceutical Technology

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Mergers, acquisitions, and restructuring
A roundup of company moves and positioning from the pharmaceutical industry and biotechnology industries and contract service providers.

PTSM: Pharmaceutical Technology Sourcing and Management
Volume 3, Issue 4

Mergers, acquisitions, and restructuring

A roundup of company moves and positioning from the pharmaceutical and biotechnology industries and contract service providers.

London (Apr. 23)AstraZeneca ( http://www.astrazeneca.com/) agreed to acquire MedImmune, Inc. (Gaithersburg, MD, http://www.medimmune.com/) for $15.6 billion. The deal is expected to close in June 2007.

The acquisition of MedImmune further advances AstraZeneca's biologics strategy, giving the company biologics manufacturing capacity and late-stage drug candidates. AstraZeneca is adding two late-stage drug candidates: "Numax," a next-generation product that follows MedImmune's "Synagis," and the refrigerated formulation of "FluMist" which has an anticipated US launch for the 2007–2008 influenza season. The acquisition of MedImmune also increases the percentage of biologics in AstraZeneca's pipeline from 7% to 27% and enlarges the latter's total pipeline by 45 projects to 163 projects.

AstraZeneca also gains biologics manufacturing capacity. MedImmune has biologics manufacturing capacity of more than 30,000 L planned by 2010, with the potential to increase capacity as much as 60,000 L with further modest investment. This would secure production requirements for the long term and avoid the need for major near-term 'green-field' manufacturing investment by AstraZeneca to support its biologics strategy, said AstraZeneca in a release.

AstraZeneca expects to achieve synergies of $500 million per year by 2009. David Mott, CEO and president of MedImmune, and James Young, president, research and development of MedImmune, have agreed to remain with MedImmune along with other senior management members, through the closing of the deal. Mott will also take a leadership role within AstraZeneca.

Basking Ridge, NJ (Apr. 17)VioQuest Pharmaceuticals ( http://www.viralquest.com/) agreed to sell its subsidiary, Chiral Quest, Inc. (Monmouth Junction, NJ, http://www.chiralquest.com/) to Chiral Quest Acquisition Corp. (CQAC), a corporation formed by Chiral Quest's management and others. ChiralQuest specializes in asymmetric chemocatalysis and custom synthesis. The sale is valued up to $3 million; $1.7 million in cash is expected to be paid to VioQuest Pharmaceuticals upon closing, plus CQAC will assume Chiral Quest's liabilities of up to $1.3 million. The deal is expected to close in the second quarter of 2007.

Toronto (Apr. 17)Patheon, Inc. ( http://www.patheon.com/) plans to restructure its current network of six pharmaceutical manufacturing facilities in southern Ontario, Canada. The plan is part of the company's strategy to focus on manufacturing prescription pharmaceutical products and to improve its profitability.

Patheon plans to divest the business related to its Niagara-Burlington operations, which provide commercial manufacturing of over-the-counter (OTC) products. The Niagara-Burlington operations consists of facilities in Fort Erie and Burlington Gateway and the commercial operations at Burlington Century. The sale will include the assets, including equipment, facilities, and land, at the Niagara and Burlington Gateway facilities. Third-party contracts will be assigned to the purchaser, subject to client approval. Patheon plans to retain its leased Burlington Century facility where its central quality control laboratory is based.

Collectively, the three sites serve 14 clients, manufacturing and packaging on their behalf about 60 products in several dosage forms, including tablets, liquids, and powders. Commercial manufacturing revenues at the three facilities were approximately $37 million in fiscal 2006, generating earnings before interest, taxes, depreciation, and amortization before repositioning costs of $2.6 million.

The 132,800-ft2 facility in Fort Erie employs 250 people and the 22,800-ft2 facility in Burlington Gateway has 80 employees. The 45,000-ft2 facility in Burlington Century employs 20 in commercial manufacturing and also includes an 8000-ft2 laboratory employing roughly 110 people who provide raw-material, finished-product, and microbiology testing for Patheon's Canadian operations.

To improve capacity utilization and profitability of the remaining Canadian sites, Patheon plans to transfer substantially all commercial production and development services at its York Mills site in Toronto to its site in Whitby, Ontario, and some production to its sites in Mississauga, Ontario, Canada and Cincinnati, Ohio.

Patheon's 160,000-ft2 facility in Toronto, Ontario manufactures approximately 60 products on behalf of 15 clients and serves 30 clients with pharmaceutical development services (PDS). The 199,000-ft2 Whitby site employs approximately 400 people.

The York Mills-Whitby consolidation initiative is expected to take up to two years to complete to allow time for regulatory approvals and to adapt the Whitby facility to accommodate the transferred production and PDS projects. After this process is completed, Patheon plans to close its York Mills facility. It expects that most, if not all, employees at York Mills will have an opportunity to transfer to Patheon's Whitby site or to another site within the company. Patheon also plans to sell the land and building at the York Mills location.

The Whitby operations derives 63% of its revenues from prescription products and 37% from legacy OTC manufacturing contracts, primarily cold and flu medications, which Patheon acquired as part of its purchase of the site from Novartis Pharmaceuticals (Basel, Switzerland, http://www.novartis.com/) in 2001. Patheon says its client intends to repatriate production of its OTC cold and flu medication to its own internal production sites in 2008.

Chalfont St. Giles, UK (Apr. 16)GE Healthcare ( http://www.gehealthcare.com/), a unit of General Electric (Fairfield, CT, http://www.ge.com/), acquired Wave Biotech LLC (Somerset, NJ, http://www.wavebiotech.com/), a supplier of disposable manufacturing technologies and processing equipment for the biopharmaceutical industry. The deal also includes Wave Biotech's European subsidiary, Wave Europe Pvt. Ltd (Cork, Ireland). Financial terms were not disclosed.

Needham, MA (Apr. 16)AVANT Immunotherapeutics, Inc. ( http://www.avantimmune.com/) will restructure to reduce ongoing operational costs and focus on building its portfolio of viral and bacterial vaccines. The company will reduce its workforce by 30% as part of the restructuring and leave its research facility in St. Louis, Missouri.

Basel, Switzerland (Apr. 12)–As part of its strategy to divest certain programs to focus on healthcare and pharmaceuticals, Novartis ( http://www.novartis.com/) will sell its Gerber baby food business to Nestle (Vevey, Switzerland, http://www.nestle.com/). Nestle will pay $5.5 billion for the business. The transaction is expected to close by the second half of 2007

Philadelphia, PA (Apr. 12)–Generic pharmaceuticals manufacturer Lannett Company, Inc. ( http://www.lannett.com/) acquired a privately owned manufacturer and supplier of bulk active pharmaceutical ingredients. Included in the transaction is a 75,000-ft2 manufacturing facility, which includes warehouse space and research and development equipment.

Dublin, OH (Apr. 10)Cardinal Health ( http://www.cardinalhealth.com/) completed the previously announced sale of its Pharmaceutical Technologies and Services (PTS) segment to The Blackstone Group (New York, http://www.blackstone.com/) for approximately $3.3 billion. Cardinal announced its plans to divest PTS in November 2006. The deal with Blackstone was announced in January 2007.

Plymouth Meeting, PA (Apr. 10)Genaera Corp. ( http://www.genaera.com/) plans to reduce its workforce by approximately 30% over the next three months and divest certain noncore assets. The company will focus its resources on the development of trodusquemine, an obesity treatment, after terminating its "Evizon" wet age-related macular degeneration program.

Minneapolis, MN (Apr. 6)Pace Analytical ( http://www.pacelabs.com/) purchased P3 Scientific, Inc. (Oakdale, MN, http://www.p3scientific.com/), a life-sciences testing facility that serves the pharmaceutical and medical-device industries. Pace will combine its laboratory in Minneapolis with P3's laboratory facility in Oakdale. The combined operations will offer compendial testing, raw materials testing, microbiology capabilities, finished product testing, extractables and leachables studies, and research capabilities.

Indianapolis, IN (Apr. 3)Eli Lilly and Company ( http://www.lilly.com/) completed its acquisition of Hypnion, Inc. (Lexington, MA, http://www.hypnion.com/). The acquisition, valued at $315 million, gives Lilly sevaral new early-stage drug candidates as well as insomnia molecule HY10275, which is currently in Phase II development.

Basel, Switzerland (Apr. 4)Roche ( http://www.roche.com/) announced two acquisitions. The company acquired Therapeutic Human Polyclonals, Inc. (THP, Sunnyvale, CA) for $56.5 million. Roche plans to integrate THP into the Roche Pharma Center of Excellence for Protein Research in Penzberg, Germany. Roche also signed a merger agreement with BioVeris Corporation (Gaithersburg, MD, http://www.bioveris.com/). Roche agreed to acquire 100% ownership of BioVeris for $21.50 per share in cash for a total of $600 million.

Madison, NJ (Apr. 3)Wyeth ( http://www.wyeth.com/) purchased the final 20% stake in Wyeth K.K. (Tokyo, http://www.wyeth.jp/) from Takeda Pharmaceuticals Company Limited (Osaka, Japan, http://www.takeda.com/). Wyeth now owns 100% of Wyeth K.K.

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