Another week starts, and another merger is announced between mid-ranking European drugmakers.
Belgian biotech UCB takes the stage this week, proposing a 4.4 billion-euro acquisition of German speciality drug company Schwarz Pharma to create a major new biopharmaceutical company specialising in neurology, cancer and inflammation.
In a statement, UCB said the ‘friendly’ takeover offer had the support of the Schwarz family – which owns around 60% of the German company. UCB/Schwarz would have annual sales of 3.3 billion euros, an annual R&D budget of 770 million euros and a stronger product and development portfolio.
The announcement follows last week’s proposed acquisitions of Serono by Merck KGaA, and Altana Pharma by Nycomed, and lends credence to the notion that, facing the globalisation of the pharmaceutical industry and an increasingly different R&D environment, many mid-sized European companies feel they must ‘consolidate or die’.
Martyn Postle, managing director of UK-based consultancy firm Cambrighe Healthcare and Biotech, told PharmaTimes that a number of family-owned, cash-rich European companies may have to go down the same route, because they are “failing in their objective of in-licensing attractive opportunities because many cannot offer a pan-European distribution capability.”
In a joint statement, UCB and Schwarz said the link would create a company with a stronger presence in Europe and the USA, with opportunities for cost-savings in the region of 300 million euros a year after three years. “The enlarged UCB would be a more attractive partner for licensing deals and R&D collaboration than either Schwarz Pharma or UCB alone,” they added.
The transaction “provides the opportunity to leverage our leading US and EU neurology franchise with new medicines ready to be marketed. The two companies are a perfect fit,” commented Roch Doliveux, UCB’s chief executive.
Schwarz has an impressive late-stage pipeline that belies its modest size, with a patch product for Parkinson’s disease, Neupro (rotigotine), filed for approval in Europe and available in its first markets elsewhere, as well as lacosamide for epilepsy and neuropathic pain in Phase III. It has also licensed another Phase III project, fesoterodine for overactive bladder, to Pfizer in a deal that should bring in a tidy sum in royalties and milestones.
Meanwhile, UCB has a potential blockbuster on its hands with Cimzia (certolizumab pegol), due for launch next year as a Crohn’s disease treatment, as well as a fast-growing epilepsy franchise based on top-selling drug Keppra (levetiracetam), with a number of line extensions – including a once-daily oral formulation – in development.
Analysts said one critical factor in the deal’s favour is that UCB’s management ahs already demonstrated that it can handle major transactions of this type, having successfully absorbed UK biotech Celltech last year.
For Postle, the spotlight now falls on other mid-sized drugmakers in Spain (Almirall, Esteve, Ferrer, Lacer, Faes and Uriach), France (Servier, Pierre Fabre and Ipsen) and Italy (Menarini, Sigma-Tau, Recordati, Chiesi, Dompe and Zambon).
For many of these a sticking point is that the ruling families do not want to vacate the top seat – not for financial reasons but because it defines their place in society, he believes.
