Replies to post #115640 on Biotech Values

[jbog]

jq1234,

It certainly didn't hurt that the yen has gained almost 35% against the dollar since the recession started.

[JJM760]

I can think of one.

Hint: It's owner's name rhymes with Lariad. LOL

[jbog]

jq12324

Bloomberg had an article out this morning talking about the Japanese purchases:

Daiichi Sankyo Co. and Kyowa Hakko Kirin Co., which announced acquisitions totaling $1.4 billion in the past nine days, may signal more overseas purchases by Japanese drugmakers, spurred by a stronger yen and flat sales in their home market.

The yen, up 8.5 percent against the dollar in the past 12 months, is bolstering the buying power of Japanese companies scouting for U.S. and European targets with promising drugs in development. Daiichi Sankyo said yesterday it’s buying Berkley, California-based Plexxikon Inc. for as much as $935 million. Kyowa Hakko announced plans to buy ProStrakan Group Plc for 292 million pounds ($475 million) last week. The buyouts will add new experimental cancer medicines, the companies said.

Demand for potential new products fueled a 30 percent jump in the number of overseas deals by Japanese companies in the pharmaceutical and biotechnology industries during the past 12 months compared with a year earlier, according to data compiled by Bloomberg. Premiums on the transactions surged 72 percent.

“Overseas mergers and acquisitions will definitely accelerate in the pharmaceutical industry in Japan,” said Koji Hirai, chief executive of Kachitas Corp., which advises companies on deals. “They’re all cash-rich looking for potential medicines and technologies for future growth. The stronger yen will definitely help.”

Japanese companies announced 34 overseas pharmaceutical and biotechnology deals and paid an average premium of 43 percent in the year ended March 1, Bloomberg data show. That compares with an average premium of 25 percent on 26 deals in the previous 12 months.

Tough Competition

“The competition is tough,” said Reed Maurer, president of International Alliance, a Tokyo-based pharmaceutical industry advisory firm. “Everybody is looking for pipeline.”

Fujifilm Holdings Corp., seeking new avenues of growth outside cameras and film, said Feb. 28 that it will buy two units of Merck & Co. that make biopharmaceuticals. The Tokyo- based maker of imaging equipment and digital cameras didn’t say how much it will pay for the U.S. and U.K. assets, which make vaccines and protein-based drugs to fight diseases such as cancer.

“These two most recent deals are a further signal of the continued commitment of the Japanese industry to oncology drug development and wider opportunities in biotechnology,” said Joshua Owide, a senior analyst at London-based researcher Datamonitor Group Plc.

Sales Slowdown

An anticipated slowdown in prescription drug sales in the Japanese market is helping drive mergers and acquisitions, Owide said. Revenue from the domestic market will increase an average of 1.6 percent a year over the next six years for Japan’s eight largest drugmakers, he said. The same time, their U.S. sales will decline by an average of 3.6 percent annually as mainstay products face competition from cheaper generic drugs, Owide said.

In contrast, cancer-drug sales will expand 12 to 15 percent annually, reaching as much as $80 billion by 2012, according to IMS Health Inc., a Norwalk, Connecticut-based research firm.

The average debt of Japan’s largest eight pharmaceutical companies is about $500 million, compared with an average debt of $6.7 billion for the remaining companies that make up the top 50 prescription drugmakers worldwide, according to Datamonitor. That gives Japanese companies an advantage, Owide said.

“It crucially highlights their relative position of strength compared with the rest of the global drug industry, which has already undertaken significant debt-driven M&A growth,” he said. Japan’s drugmakers are “much better positioned to carry out increasingly costly M&A deals.”

Daiichi Sankyo, Japan’s third-largest drugmaker, was one of several bidders for closely held Plexxikon, said Alan Mendelson, a partner at law firm Latham & Watkins in Menlo Park, California, which advised Plexxikon on the deal.

“We just negotiated with each and tried to get the price as high as we could,” Mendelson said in an interview yesterday. “Needless to say Daiichi was very desirous of buying the company and they agreed to pay a very fair price.”