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Asia’s largest drug maker, Takeda, today announced that it will eliminate 2,800 jobs or about 9% of its workforce in the US and Europe. The job cuts, planned over the next four years, are intended to better integrate NycoMed, the Swiss company purchased by Takeda for $12 billion last September.

Most of the positions affected by the downsizing are in the US and Europe and will help the company save $1.7 billion over the next year or so.The plan includes the elimination of 2,100 jobs mainly in Europe and 700 in the U.S. across research, commercial, operations and administrative functions. Takeda currently has about 30,000 employees worldwide with operations in 42 countries.

The reason for the downsizing is slumping US sales of the company’s top selling drug Actos (diabetes) that will lose patent protection this August and face stiff generic competition. Like other pharmaceutical companies, Takeda is abandoning the US and European markets in favor emerging markets in China, India, Brazil and the Middle East.

Until next time...

Good Luck and Good Job Hunting!!!!!!!!!

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Shire, an Irish speciality pharma and rare diseases drug maker, today announced that it would purchase Connecticut-based Advanced BioHealing (AB) for $750 million in an all cash deal. 

The main reason for the deal was AB’s Dermograft, a regenerative bio-engineered skin substitute used for the treatment of diabetic foot ulcers (DFU). Dermagraft currently has roughly a 5 percent share of the potential $3 billion slow-healing DFU market, approximately $146 million in US sales last year, and Shire says the potential for growth in the DFU market is considerable. Also, AB had finished enrolling patients into multinational trials to investigate Dermagraft for the treatment of venous leg ulcers. If all goes as planned, a regulatory filling in the USA for the new indication is planned for the first quarter of 2012.

Shire tendered its offer to purchase Advanced BioHealing one day before the company was to launch an initial public offering of 13.4 million shares priced from $14 to $16. The IPO would have raised over $200 million and the company would have been valued at around $630 million. The deal was a strategic move for Shire that wants to expand its product offerings in the speciality pharma sector. It isn’t clear whether the acquisition will result in layoffs at AB. Unfortunately, all cash transaction typically do not bode well for the company this is being acquired.

In other news, Takeda, after denying reports earlier in the week that it intended to purchase Nycomed for $12.0 billion is expected to announce the deal today.

Until next time...

Good Luck and Good Job Hunting!!!!!!

Addendum: At the press conference this afternoon, Takeda tersely stated that it had not agree to purchase Switzerland's Nycomed. Stay tuned for the next installment of the saga!

Addendum to the Addendum: Takeda Pharmaceuticals and Nycomed  jointly announced today that Takeda has reached an agreement with the shareholders of Nycomed in which Takeda will acquire the Zurich-headquartered company for $13.6 billion ( 9.6 billion Euro) on a cash-free, debt-free basis. The boards of directors of each company unanimously approved the transaction which is expected to be completed within 90 to 120 days, making it a wholly owned subsidiary of Takeda, subject to antitrust clearance. The purchase would exclude Nycomed's U.S. dermatology business.

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Takeda Pharmaceutical Company, Japan’s largest pharmaceutical company, yesterday announced its intention to purchase the Swiss drug maker Nycomed for 8 to 10 billion euros ($11.4-14 billion). While the deal is not certain to close, it signals Takeda’s intention to purchase its way into the US and European markets.

Takeda acquired Cambridge, MA-based Millennium Pharmaceuticals in 2008 for $8.8 billion, the largest foreign acquisition ever by a Japanese company. The Millennium acquisition was intended to bolster Takeda’s competencies in genomics and oncology drug discovery. If Takeda is successful in its bid, Nycomed would enhance the company’s standing in treatments for gastric, respiratory and inflammatory disorders. Nycomed has operations in roughly 70 countries, with Europe representing 50 percent of the company’s sale and emerging markets 38 percent.

Takeda’s chief executive officer Yasuchika Hasegawa has pursued an aggressive M&A strategy since assuming control of the company in 2003. Historically, Japanese drugmakers intentionally remained small and were content doing business in local and other Asian markets. However, Hasegawa has changed the “game” and has forced some of Takeda’s rivals to emulate his global strategy. To that end, in recent years Daiichi Sankyo Company has purchased Plexxikon and Ranbaxy and Astellas acquired OSI pharmaceuticals as part of a westward expansion.

While Takeda remains Japan’s largest pharmaceutical company, net profit slumped 17 percent last year and the company is losing patent protection for its largest selling drugs, Prevacid (ulcers) and Actos (diabetes). Like Takeda, Nycomed sales are being hit by the loss of patent protection for its largest selling drug Protonix (antacid). Worldwide sales of the drug plummeted by almost 28 percent. Therefore, it would appear that Takeda’s pursuit of Nycomed is based more on its pipeline rather than currently marketed products.

Stay tuned for late-breaking news on the deal!

Until next time,

Good Luck and Good Job Hunting!!!!!

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Japanese drug maker Takeda Pharmaceuticals announced today that it will slash almost 1,600 jobs or 28 per cent of its 5000 person US workforce. Most of the cuts will take place at the company’s North American headquarters (1400) in Deerfield, Illinois; the remainder (ca. 170) will occur at Takeda Global Research and Development Center in Lake Forest. These cuts represent a 20 per cent reduction in R&D employees at the site.

The layoffs, which are part of a restructuring of Takeda’s North American operations, are directly related to declining sales and the coming generic competition to its top-selling diabetes drug Actos. In addition to being Takeda's biggest revenue producer, Actos is the nation's top-selling brand name diabetes drug and was the 8th-best selling brand in 2009, generating $3.4 billion in U.S. sales, according to the most recent information available from market.

Despite rumors of job creation in other sectors of the US economy, pharmaceutical companies continue to shed jobs.

Until next time…

Good Luck and Good Job Hunting!!!!!!!!!!

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Sepracor shareholders may be able to sleep better at night without the aid of the company’s top selling insomnia drug Lunesta after agreeing to be purchased on Thursday by Dainippon Sunmitomo Pharma of Japan. Dainippon will pay $2.6 billion for the rights to Lunesta and other drugs in Sepracor’s pipeline. 

This is the third deal in the last two year involving the purchase of American pharmaceutical companies by Japanese drug makers seeking to aggressively expand their reach into the US drug markets. Last year, Takeda Pharmaceutical purchased Cambridge, MA-based Millenium Pharmaceuticals for $8.8 billion and Eisai brought MGI Pharma of Minnesota for $3.9 billion. 

Sepracor, a specialty pharmaceutical company founded in 1984 focused on strategy of developing single isomers or chiral drugs and active metabolites of top selling drugs with the goal of developing a pipeline of proprietary pharmaceutical products. The company’s most successful product is Lunesta, a prescription sleep aid that had sales of almost $500 million in 2008.

Last January, the company layed off 20% of its workforce (350 sales reps, plus 410 contract sales reps) as Lunesta sales slumped because of competition from generic versions of Ambien and branded Ambien CR and revenue losses from its Xopenex COPD franchise. It isn’t clear whether or not more Sepracor will shed more jobs after the Dainippon deal closes sometime next year. 

Stay tuned for updates!

Until next time...

Good Luck and Good Job Hunting!!!!

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Despite a recent report heralding the ascendancy of the Welsh biotechnology industry, the majority of biotech companies in Britain are in danger of fading away according to a report in London's  Financial Times. According to the Times; “Over the past year the sector has witnessed a string of high-profile drug failures, share prices have plunged and there have been almost no public listings. The sector is shrinking as private biotech companies are bought by cash-rich pharmaceutical companies, most of which are based abroad”.

“The quality of British science has never been in question. Commercial biotech’s perennial problem, say the pundits, is instead a lack of financing, management expertise and commercial savvy. “The UK has always labored under the yoke of not having enough venture capital around and not having the people prepared to take risks” said one analyst.” Nevertheless, the UK is currently  responsible for more than one-third of the European Union’s total drug pipeline.

The British biotechnology industry isn’t alone. Consolidation of the US biotechnology industry has been quietly going on for the past 5-10 years. Many successful American companies have been acquired by major pharmaceutical companies. For example, MedImmune and Millennium Pharmaceuticals were recently purchased by Astra Zeneca and Takeda Pharmaceuticals respectively. That said, I don’t think that what is happening in the UK is unique to the British biotech industry. The bottom line is this; Biotech is a capital-intensive, briskly paced, risky business that is, at most, 35 years old. More companies than not are expected to fail. Pharma, on the other hand, is a conservative and experienced cash-rich industry that is over 100 years old. Therefore, it follows that pharma companies, when possible, will buy successful biotech companies to bolster their thinning pipelines to stabilize their stock prices.

In my opinion, the seminal underpinning and essence of the biotech industry is to harness scientific originality to create innovative l technologies and products. That said, I believe that the biotechnology industry has finally become an integral part of the life sciences ecological food chain (think of biotech as a producer and pharma as a consumer).  I can’t think of many biotechnologies company executives (with the exception of Biogen) that wouldn’t consider acquisition or merger with a major pharmaceutical company as an ideal exit strategy for their stakeholders!

Until next time….

Good Luck and Good Job Hunting!!!!!!

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Millennium employees find themselves in an enviable position that most pharmaceutical and biotechnology employee would die for!  Shortly after Takeda announced that it would buy Cambridge MA-based Millennium Pharmaceuticals for $8.8 billion, it offered many Millennium employees retention bonuses to stay at the company for 12 to 24 months until the acquisition is completed. These bonuses will be in addition to cash that many of Millennium’s 1,000 employees will get by exercising their stock options (Takeda is paying a premium to purchase all of Millennium outstanding shares of stock).

While offering retention bonuses to employees of a company that is going to be acquired is unusual it is not unheard of.  Retaining key employees during an acquisition typically makes the transition a lot smoother.  Further, it signals to extant employees that management values their services and that their continued presence at the company is vital to its success.  Finally, it serves to reduce the stress and uncertainty felt by many employees when a company is sold.

In my opinion, offering Millennium employees retention bonuses is a very bold and smart move by Takeda.  Unlike other pharmaceutical companies who have acquired biotechnology companies for their approved drugs or investigational medicines in their pipelines, this is Takeda’s first foray into the biotechnology business. Put simply, Takeda executives lack the expertise and requisite skill sets necessary to successfully compete in the biotechnology arena.  Encouraging and retaining employees who helped to make Millennium a success is a brilliantly crafted strategy that will permit Takeda to quickly learn how to compete in the biotechnology space in a fiscally-responsible manner.

One of the biggest hurdles to overcome after an acquisition is merging the corporate cultures that existed at the two companies prior to acquisition. One possible solution to this problem is to restructure the acquired company and terminate many or all of its employees. Another solution is to determine (over time) which employees are or aren’t vital to operation of the company. Although this approach is not as draconian as the first option, it requires an inordinate amount time and money to implement. Ask any Pfizer executive about this the utility of this approach (I think that they are still trying to recover from the Warner Lambert and Pharmacia acquisitions that took place in the mid to late 1990s).  

I think the Japanese got this one right.   Maybe we Americans can learn a thing or two from them?

Until next time…

Good Luck and Good Job Hunting!!!!!!!!!!!

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Takeda Pharmaceutical Co., Japan’s largest pharmaceutical manufacturer, announced that it has agreed to buy Cambridge MA-based Millennium Pharmaceuticals for $8.8 billion. Millennium, founded in 1993 by high profile MIT researchers and once heralded as one the most innovative American biotechnology companies, never lived up to analyst’s expectations. That said, the company did develop and win regulatory approval for an anti-cancer drug, Velcade, which is expected to garner additional approval for wider use in oncology later this year.

Velcade, which is used to treat relapsed multiple myeloma after other drugs fail generated more than $800 million last year. Millennium anticipates U.S. approval by June to promote Velcade as an initial therapy to treat these disorders. Millennium markets Velcade in the US and shares revenue with Johnson & Johnson which markets Velcade in 85 other countries. Analysts predict that the Takeda acquisition will help to propel Velcade to blockbuster status.

The Takeda-Millennium deal follows Eisai Co.’s (another Japanese company) agreement in December to buy the U.S.'s MGI Pharma Inc. for $3.9 billion as Japanese companies, aided by a weak dollar against the yen, seek growth abroad. Japanese companies have been hampered by government-ordered price cuts, weak pipelines and a lack of new products  As one financial analyst put it ``There's no doubt the weak dollar against the yen is making U.S. biotech very attractive right now to potential Japanese buyers,''

Takeda’s best seller is the diabetes drug Actos which is slated to lose patent protection in the near future. Acquisition of Millennium provides Takeda with an entrée into the oncology and cardiovascular markets both of which are poised for expansive growth in the next five years. Analysts also believe that the Millennium acquisition will boost Takeda’s drug discovery and development flow. Millennium is conducting human trials with experimental drugs for cancer, heart disease, gastrointestinal disorders and rheumatoid arthritis.

The ongoing acquisition of American biotechnology companies by Japanese pharmaceutical companies reminds me of  the Japanese foray into the US real estate market in the early 1990s. Only time will tell whether the Japanese will be able to hang on to their acquisitions this go around (they weren’t the last time).  Earlier this week, Switzerland's Novartis AG agreed to buy 77 percent of eye-care company Alcon Inc. in a two-step transaction totaling $39 billion. Does anybody else see a troubling trend developing here as a result of the recession that we are in or heading into?

Don’t be surprised to see some “asset reallocation” and downsizing at Millennium. The Japanese are well recognized for increasing efficiency and work output with smaller numbers of employees.

Until next time….

Good Luck and Good Job Hunting (not in Cambridge MA)!!!!!!!!

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