Daiichi Sankyo looking to sell OTC business for $900M? 'Not correct,' says company

Is Daiichi Sankyo following in several Big Pharma companies’ footsteps out the consumer healthcare door? According to the company, the answer is "no."

Rumors emerged in March when Reuters, citing four people with knowledge, reported Daiichi was exploring a sale of its wholly owned over-the-counter unit, Daiichi Sankyo Healthcare, and had hired JPMorgan as its adviser. On Thursday, word had it that several companies are in talks for the OTC business, which could fetch 100 billion yen ($910 million), the news wire said, quoting Nikkei Business.

But Daiichi explicitly denied it.

“Although Daiichi Sankyo is constantly examining the potential for a variety of strategic developments with the aim of sustainable business growth, this reporting is not correct,” it said in a statement Thursday.

Daiichi’s OTC unit sells some popular products in Japan and fellow Asian countries, especially in medical cosmetics. Its portfolio includes the Lulu cold remedy, topical anti-inflammatory analgesic Loxonin and Transino spot/pigmentation correction med, among others.

In the fiscal year ended in March, the unit brought in revenues of 66.4 billion Japanese yen ($600 million), representing about 7% of the company’s entire business. The OTC haul was a 9% decline year over year, which the company attributed to changes in accounting policies, not product sales.

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The OTC sales buzz comes as Daiichi is pivoting away from its traditional focus on cardiovascular and metabolic diseases and developing a new interest in oncology. With that new direction, it recently partnered with AstraZeneca on antibody-drug conjugates in a deal potentially worth $6.85 billion.

Many large pharma companies have lately exited consumer healthcare to focus on prescription medicines. GlaxoSmithKline is combining its consumer business with Pfizer’s, expecting to spin off the franchise into a standalone business in three years. Daiichi’s Japanese compatriot Takeda Pharmaceutical has promised to keep its OTC unit in Japan, but it might hive off its European OTC assets as it works to pay down debt incurred with its gigantic Shire buyout.