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September 26, 2006


UCB To Acquire Schwarz Pharma

Multi-billion-dollar purchase continues European drug industry consolidation

Rick Mullin

UCB, a Belgium-based biopharmaceutical firm, has agreed to buy Schwarz Pharma AG, Monheim, Germany, for $5.6 billion. The deal marks the third acquisition involving midsized, family-owned European pharmaceutical companies in less than a week (C&EN, Sept. 25, page 16).

Schwarz markets a patented drug for Parkinson's disease and has therapies in late-stage development for Parkinson's, epilepsy, and restless leg syndrome. It also has a sizable generic drug portfolio, including the first generic version of AstraZeneca's Prilosec. Its sales last year were $1.3 billion.

The combined company, which will be called UCB, will have annual sales of $4.2 billion and an annual R&D budget of close to $1 billion. Headquartered in Belgium, it will have operations in Germany, the U.K., and the U.S.

"The proposed combination with Schwarz Pharma is a leap forward in building UCB into a global biopharmaceutical leader focused on selected disease areas, especially neurology, inflammation, and oncology," says UCB CEO Roch Doliveux. He adds that the deal will strengthen UCB's position in the U.S. and Europe. "It provides the opportunity to leverage our leading U.S. and EU neurology franchise with new medicines ready to be marketed," he says. "The two companies are a perfect fit."

As with Merck KGaA's acquisition of Serono and Altana's sale of its pharmaceuticals unit to Nycomed, both announced last week, analysts say the UCB-Schwarz agreement is being pursued in order to create a larger, more competitive drug company.

Stephen Pope, the head of equity research at Cantor Fitzgerald in London, says the deal is part of an ongoing trend toward consolidation in Europe's "atomized" midsized drug sector. Small players, especially family-owned firms such as Schwarz and Serono, are finding it difficult to acquire new products.

According to Pope, the UCB deal is expected to net $383 million in synergy-derived annual savings, money that will bolster the combined firm's ability to develop its drug pipeline. "The world will belong to players with a complete competitive edge or deep pockets," he says.

Chemical & Engineering News
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