Shedding noncore assets is the trend du jour in Big Pharma, and now another company may be jumping on the bandwagon. Belgium's UCB is reportedly looking into a sale of Kremers Urban Pharmaceuticals, its Princeton, NJ-based generics unit.
The business is expected to be valued between $1.5 billion and $2 billion, according to Reuters, which spoke to unnamed sources familiar with UCB's plan. UCB hired investment bank Lazard to work on the sale, the sources said. They added that Kremers Urban is expected to record earnings of about $170 million this year on sales of a number of generic drugs, including a treatment for attention deficit disorder that was approved by the FDA in 2013.
The quest to slim down by casting off low-value products has swept through the pharma industry over the last several months, with such bigwigs as Merck ($MRK), GlaxoSmithKline ($GSK) and Sanofi ($SNY) leading the way. In May, reports emerged that Merck could be selling a large portfolio of old drugs, including blood pressure treatments Cozaar and Hyzaar, baldness remedy Propecia and migraine reliever Maxalt. The brands could fetch as much as $15 billion.
Earlier this week, press reports suggested that a group of private equity firms is considering merging GSK's and Sanofi's on-the-block products into a single purchase. Analysts estimate GSK's portfolio is worth up to $12.5 billion, while Sanofi's could be valued at $8.5 billion. Private equity firms don't have a long track record of managing pharma assets, but they've certainly proven an interest in boosting their presence there, as evidenced by Carlyle Group's $4 billion purchase of Johnson & Johnson's ($JNJ) Ortho Clinical Diagnostics earlier this year. Mylan ($MYL) and Abbott Laboratories ($ABT) have also emerged as potential players in deals involving aging pharma assets.
Sources tell Reuters they expect UCB's generics unit will generate interest among both private equity firms and other companies in the industry. Kremers Urban has a portfolio of drugs that present high barriers to entry in the market, according to Reuters.
No doubt UCB has been shifting its priorities of late. In February, the company said that next year, its biopharma chief Jean-Christophe Tellier would take over as CEO for the departing Roch Doliveux. Tellier will lead the company's efforts to win label expansions for its top-selling drugs Cimzia, an anti-inflammatory, and Vimpat, which is currently approved as adjunctive therapy for partial onset seizures in adults with epilepsy. UCB is also working on new drugs to treat osteoporosis, lupus and epilepsy.
- here's the Reuters story