Belgium's UCB calls it quits on $1.53B sale of U.S. generic drug unit

UCB CFO Detlef Thielgen

Weeks after Belgium's UCB announced that it would sell its U.S. generic drug business for $1.53 billion, the company is calling off the sale in light of regulatory pushback over one of the unit's products.

The Brussels-based company agreed to end the sale of Kremers Urban Pharmaceuticals to private equity firms Advent International and Avista Capital Partners after the FDA asked for an additional study on Kremers' copy of Johnson & Johnson's ($JNJ) Concerta pill for attention deficit hyperactivity disorder. UCB still intends to move forward with a sale, but needs to clear up the regulatory limbo first, the company said in a statement.

"We are of course disappointed that we could not complete the transaction as planned at this time but believe that the mutual termination is the right step to allow time for the needed evaluation of the best way forward and as a result to create the most value," UCB CFO Detlef Thielgen said in a statement.

UCB in November said that it planned to sell off Princeton, NJ-based Kremers to reduce its debt load and beef up its product pipeline. The sale would also allow the company to focus on its core businesses of neurology and immunology, CEO Roch Doliveux said at the time.

UCB's epilepsy drug Keppra went off patent in 2011, and since then the company has worked hard to fill the sales gap. Top-selling products include anti-inflammatory powerhouse Cimzia, a treatment for Crohn's disease and rheumatoid arthritis; and Vimpat, an adjunctive therapy for partial onset seizures in adults with epilepsy. UCB expects peak sales of at least €1.2 billion ($1.6 billion) for each drug.

Big Pharma companies have made investors happy by selling or spinning off business units. But UCB's initial sales announcement pushed the company's stock lower and left some investors scratching their heads. Kremers is more profitable than UCB as a whole, and the sale prompted UCB to delay its goal of achieving a 30% profit margin to 2018 from 2017, Bloomberg reports.

UCB is not the only drugmaker looking to shed some noncore assets; big names such as Merck ($MRK), GlaxoSmithKline ($GSK) and Pfizer ($PFE) are sweeping out the old in favor of the new, slimming down their portfolios and making room for newer products. In April, Novartis ($NVS) pulled off one of the biggest sales swaps of the year, getting GSK's cancer portfolio in exchange for its vaccines unit, selling its animal health business to Eli Lilly ($LLY) and teaming up with Glaxo to launch a consumer health joint venture. In September, AstraZeneca ($AZN) sold off 18 older drugs to specialty generics maker IGI Laboratories for $500,000 up front, plus $6 million in milestones and up to $3 million in royalties. And Pfizer spun off its animal health business, Zoetis ($ZTS) and sold off its nutrition unit to Nestlé.

But it hasn't all been smooth sailing for drugmakers trying to hive off parts of their businesses. Sanofi ($SNY) and GSK faced stumbling blocks this year while trying to sell aging products. In October, Sanofi's tentative plan to spin off an $8 billion portfolio of old drugs stalled due to internal squabbles regarding the sale. Earlier this month, GSK said it would hold onto $3 billion worth of older products rather than sell them.

- read UCB's statement
- here's the Bloomberg story

Special Report: Pharma's top 10 M&A deals of 2014's first half

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