Schering-Plough Makes Bid to Acquire Organon BioSciences for $14.4 Billion

March 15, 2007
Patricia Van Arnum
ePT--the Electronic Newsletter of Pharmaceutical Technology

Kenilworth, NJ (Mar. 12)-Schering-Plough Corporation agreed to acquire Organon BioSciences N.V., the human and animal health businesses of Akzo Nobel N.V., for EUR 11 billion ($14.4 billion) in cash.

Kenilworth, NJ (Mar. 12)-Schering-Plough Corporation (www.schering-plough.com) agreed to acquire Organon BioSciences N.V. (Oss, Netherlands, www.organonbiosciences.com), the human and animal health businesses of Akzo Nobel N.V. (Arnhem, Netherlands, www.akzonobel.com), for EUR 11 billion ($14.4 billion) in cash.

Last year, Akzo Nobel divested its human and animal health businesses into a separate company, Organon BioSciences, with the plan to partially float the company on the European stock exchanges. With this deal, Akzo Nobel says it will no longer be proceeding with the partial initial public offering of Organon BioSciences on the Euronext Amsterdam.

Organon, the human pharmaceutical business of Organon BioSciences, had sales of $3.4 billion in 2006. Key products include “Follistim/Puregon,” a follicle-stimulating hormone for infertility, “Esmeron/Zemuron,” a muscle relaxant, and “NuvaRing” and “Implanon” for contraception. Intervet, the animal health business of Organon BioSciences, posted 2006 sales of roughly $1.5 billion.

“With this transaction we take another major step in our Action Agenda to transform Schering-Plough into a global high-performance company for the long term,” said Fred Hassan, chairman and CEO of Schering-Plough, in a company statement. “It is the right deal at the right time as we accelerate into the Build the Base phase of our transformation.”

Strategic rationale for the deal

The move adds to Schering-Plough’s position in certain therapeutic areas, provides access to late-stage drug candidates, and adds biologics capability for both human and animal health, including potentially human vaccine development. 

“Organon BioSciences will be an excellent fit with Schering-Plough-strategically, scientifically, and financially,” said Hassan. “It builds on our growing strength in primary care, giving us immediate access to central nervous system (CNS) and women’s health care products. The acquisition of Organon BioSciences also fills a gap in our late-stage pipeline by adding five compounds in Phase III development and a number of promising projects in Phase II development.”

These Phase III compounds are: asenapine for treating schizophrenia and acute mania bipolar disorder; sugammadex for reversing neuromuscular blockade induced during surgical procedures;  NOMAC/E2, an oral contraceptive containing nomegestrol acetate, a novel progesterone, and estriadiol; “ORG36286,” a long-acting recombinant follicle-stimulating hormone for infertility; and esmirtazapine for treating insomnia and potentially hot flashes in menopausal women.

“In addition, the acquisition of Organon BioSciences enhances Schering-Plough’s strength in human and animal biologic products, including the potential to develop human vaccines,” said Hassan. “In light of Schering-Plough’s expanding early pipeline, Organon BioSciences’s strong biologics manufacturing capability is a further important asset for the combined company.”

 Manufacturing and R&D assets gained

On the human health side, Organon’s research and manufacturing facility in Oss, the Netherlands, will be the center of Schering-Plough’s global gynecology and fertility activities, while Organon’s neuroscience research will continue in Newhouse, Scotland. The human pharmaceutical business also has research and development facilities in Roseland, New Jersey; Cambridge, Massachusetts; Waltrop, Germany; Riom, France; and Osaka, Japan. It employs 13,700 staff overall, which includes 1,800 in the United States.

Schering-Plough expects to achieve annual cost synergies of $500 million over the next three years.

The deal is expected to close by the end of 2007, subject to certain closing conditions, including regulatory approvals. Shareholder approval is not required for the transaction to be consummated by either Akzo Nobel or Schering-Plough, said the companies.