Denmark’s Nycomed has emerged as the buyer for German group Altana’s pharmaceuticals arm, offering 4.5 billion euros ($5.7bn) for the business, which is in the process of being separated out from Altana chemicals.

Altana has been angling to sell off its pharmaceutical unit for a little over a year, as it considers it too small to compete on a global stage, particularly in light of the swelling costs of new drug development.

The pharmaceuticals business needs a partner to help reduce its reliance on gastrointestinal drug pantoprazole, which had sales of $1.8 billion last year but is due to start losing patent protection in 2009. Moreover, recent setbacks Altana has suffered with two drug candidates, the corticosteroid Alvesco (ciclesonide) and Daxas (roflumilast) for asthma and chronic obstructive pulmonary disease, have taken some of the lustre off its near-term pipeline.

In a statement, Nycomed said the combined company would have an initial workforce of around 12,000 people across more than 40 countries – perhaps suggesting that staff cuts may be on the horizon - and have annual sales of around 3.1 billion euros and earnings before interest, taxes, depreciation and amortisation (EBITDA) of 848 million euros.

There has been a mixed reaction to the deal, which had been grinding around the rumour mill over the last six weeks. While some observers thought the price was good and provided a good increase in geographic reach and R&D budget, others noted that Nycomed, which has traditionally relied on in-licensing drugs from other companies to market in Europe, is taking over a relatively sparse product pipeline from Altana.

In something of a switch, Nycomed is playing up the marriage of Altana’s marketing strengths with its own pipeline. This includes osteoporosis drug Preotact (parathyroid hormone), licensed from NPS Pharmaceuticals and launched in its first Europan markets in March, ZyComb (xylometazoline hydrochloride and ipratropium bromide), a nasal spray designed to treat the symptoms of the common cold that has been filed for approval in Europe, and a nasal formulation of the opioid analgesic fentanyl in Phase III trials.

The headquarters of the new company will be in Zurich, Switzerland, while the primary R&D facilities will be in Konstanz, Germany, where Altana's research activities are based.

The announcement comes amid a flurry of merger and acquisition activity in the European drug sector, with the news that Merck KGaA is offering to buy Swiss biotech Serono for $13.5bn emerging yesterday and Bayer fresh from its $21.5bn acquisition of Schering AG.

Nycomed said the Altana Pharma acquisition would close by the end of the year, pending appraisal by European and US antitrust authorities and a vote by Altana’s shareholders.