More on the Kirin takeover of Kyowa Hakko. Reuters reports in a later newswire that Kirin has offered to acquire a 50.1% stake in a two-step transaction.
>> The latest foray by a Japanese brewer came Friday, when Kirin Holdings Co., Japan's biggest brewer by market capitalization, said it was discussing the purchase of a stake in Kyowa Hakko Kogyo Co., a midsize drug company. The deal could value Kyowa Hakko, which makes allergy medications and cancer therapies, at more than $5 billion, mergers-and-acquisitions bankers say.
A Kirin spokesman confirms the company was in discussions with Kyowa Hakko but doesn't comment on where the talks stood or how large a stake the company might take. Kyowa Hakko says it is always considering potential tie-ups but that nothing concrete had been decided.
…Kirin's latest move underscores a fundamental difference in the way Japanese brewers are approaching their future compared with their Western counterparts. Because buying a company within the same industry often requires layoffs and closures, Japanese companies tend to avoid mergers. That has enticed Japan's four big beer makers to seek ways to diversify into far-flung areas, from baby food to flowers.
Many modern drugs, particularly complex protein therapies, are made using technology similar to the fermentation technology the beer companies employ. It is also a high-margin business: Pharmaceuticals contribute just 4% of Kirin's overall revenue but add 10% to Kirin's operating profit.
…Kirin established its pharmaceutical business in 1982 and launched its first product in 1990. That drug, marketed as Epogen and Procrit, was jointly developed with U.S. biotech giant Amgen Inc. It is used to treat patients suffering from low red-blood-cell counts or requiring dialysis. The drug, which is made using a fermentation process, accounts for about 70% of the revenue of Kirin's pharmaceutical unit.
In 1988, Kirin established a wholly owned U.S. subsidiary to develop medicines based on antibodies, Y-shaped proteins that bind to bacteria and viruses and destroy them. In 2005, it paid about $50 million to buy Hematech Inc., a U.S. company working on antibody therapies[#msg-15899425].
Kyowa Hakko also develops antibody-based medicines. It has several products in its pipeline to fight allergies and cancer. <<
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