Celltrion puts Takeda’s assets up for sale after 3 years

South Korea’s Celltrion Inc. has put its Japanese Takeda Pharmaceutical Co.'s primary care assets acquired in 2020 on sale as the biosimilar giant is raising money to transform into a drug developer and considering investments of billions of dollars in acquisitions.

Celltrion selected JPMorgan Chase & Co. as manager to sell the sales rights for Takeda’s pharmaceutical products and over-the-counter (OTC) products in Asia Pacific excluding South Korea, according to bio-industry sources in Seoul on Sunday. A number of major global pharmaceutical companies reportedly showed interest in the takeover.

Celltrion in June 2020 bought for $278 million the rights for patents, trademarks, permits and sales of 18 primary care assets for Takeda’s pharmaceutical products sold in nine Asia Pacific countries such as South Korea, Thailand, Taiwan, Singapore, Malaysia and Australia. Those pharmaceutical products included diabetes treatment Nesina and hypertension medicine Edarbi, as well as OTC drugs such as cold medicine Whituben.

The takeover came as the South Korean company was aiming to become a global biopharmaceutical maker by strengthening its biosimilar and synthetic drug businesses while expanding its markets into Southeast Asia and Australia.

But global major pharmaceutical and biotechnology companies such as Pfizer Inc. and GSK Inc. considered sales splits of OTC drug businesses, which lost economic added value at the time.

NEW STRATEGY IN NEW ENVIRONMENT

Celltrion has had to modify its strategy as the global biosimilar market condition has changed.

Pharmacists are allowed to prescribe medications, modify drug therapy, give vaccines and conduct lab tests in some US states, while the global biosimilar market has been growing faster than expected with patents of many famous original drugs expired.

The company’s OTT drug business logged a mere 10% operating profit margin last year, just a third of the nearly 30% margin from its biosimilars such as Remsima SC, a subcutaneous injection-type medication for autoimmune disorders.

Such a relatively poor performance was known to cause the company to have decided to sell the sales rights for Takeda’s products in Asia Pacific excluding South Korea, industry sources said.

RETURNING FOUNDER’S AMBITION

Celltrion Group founder and Chairman Seo Jung-jin, who in March returned to management two years after retirement, unveiled a goal to make the company a global bio-industry leader generating 40% of its sales from new drugs and the rest from biosimilars.

“We will not seek rights offerings nor increase debts although research and development costs for new drug development will rise,” Seo said at that time.

The sale of Takeda’s assets is likely to help the group secure the necessary funds as it is scheduled to work on clinical trials for 10 candidates next year.

Seo also vowed to acquire other companies for growth although he will not have a finger in every pie.

The bioindustry has been closely watching Celltrion’s takeover targets since the company dropped the bid for the biopharma solutions unit of the US-based Baxter International Inc. last month, a deal estimated at $4 billion.

“We will consider acquisitions of companies, especially those with bio platform technology such as messenger ribonucleic acid (mRNA), by raising funds of 4 trillion won-5 trillion won,” Seo said. “We will be able to spend the money in the third and fourth quarters of this year.”

Celltrion currently holds 540 billion won ($421.9 million) in cash and cash equivalents available on a consolidated basis but industry sources expected the group to raise trillions of won for acquisitions through treasury stocks, bonds, Seo’s own stakes and share swaps.

Write to Dae-Kyu Ahn and Jeong Min Nam at powerzanic@hankyung.com
 
Jongwoo Cheon edited this article.