Amid the pharma slimdown craze, Belgium's UCB is getting in on the action by selling its U.S. generic drug unit for $1.53 billion.
UCB will hand over Princeton, NJ-based Kremers Urban Pharmaceuticals to private equity firms Advent International and Avista Capital Partners, and plans to use the proceeds to reduce its debt load and beef up its product pipeline, the company said in a statement. UCB's board of directors unanimously approved the sale, and the deal is expected to close by the first quarter of 2015.
The sale also gives UCB the opportunity to focus on its core businesses of neurology and immunology, current CEO Roch Doliveux said in a statement. The company's epilepsy drug Keppra went off patent in 2011, and since then UCB has been building up its product pipeline to fill the sales gap. Top-selling products include Cimzia, an anti-inflammatory treatment for Crohn's disease and rheumatoid arthritis, and Vimpat, approved as adjunctive therapy for partial onset seizures in adults with epilepsy, and UCB expects peak sales of at least €1.2 billion ($1.6 billion) for both drugs.
|Jean-Christophe Tellier--Courtesy of UCB|
"Our growing core business and UCB's progressing early and late-stage pipeline now allow us to focus even more on providing innovative solutions to patients living with severe diseases," CEO-Elect of UCB Jean-Christophe Tellier said in a statement. The company in February appointed Tellier to replace current chief Doliveux as head of its biopharma brands unit, effective March 2015.
Still, some analysts are questioning what the deal could mean for UCB's bottom line. The company's Kremers unit is more profitable than UCB as a whole, and it's unclear as to how the company will hit its profit-margin goals without out it, a KBC Securities analyst wrote in a note to investors seen by Bloomberg.
But UCB is far from the only company looking to shed some noncore assets. Pharma heavyweights such as Merck ($MRK), GlaxoSmithKline ($GSK) and Sanofi ($SNY) are also looking to slim down their portfolio and make room for newer products. In September, AstraZeneca ($AZN) unloaded 18 non-marketed drugs, selling the products to specialty generics maker IGI Laboratories for $500,000 up front, plus $6 million in milestones and up to $3 million in royalties. In October, Sanofi's plans to spin off its $8 billion portfolio of old drugs stalled as top-level management could not agree as to how to move forward with the sale.
Novartis ($NVS) in April pulled off one of the industry's biggest changeovers in a three-part deal, getting GSK's cancer portfolio in exchange for its vaccines unit, selling its animal health business to Eli Lilly ($LLY) and forming a consumer health joint venture with Glaxo, all in an effort to refocus on branded drugs, eye care products and generics.
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