The 237-year-old Japanese company Takeda Pharmaceutical Co. has successfully acquired the UK-based Shire Plc. This comes ahead of schedule as the process was finalized in 8 months.
Takeda expressed interest in buying the Shire back in March 2018. By April 19th, they made their first offer. This offer came to $60 billion, but it was rejected as the Shire believed their company was being undervalued. In total, Takeda made 5 different bids, all of which were rejected save for the last one, valued at $62.2 billion.
This merger is among the biggest acquisitions of 2019 so far and happens to be the largest one undertaken by a Japanese company. The pharmaceutical industry is currently going through a period of mass acquisitions, as companies are trying to consolidate themselves due to more regulations on drug prices and the threat of expiring patents. Other notable acquisitions include Bristol-Myers Squibb buying Celgene (a deal that has already surpassed the Takeda deal based on cost) and Eli Lilly purchasing Loxo Oncology.
By combining its revenue, Takeda has now become one of the top 10 pharmaceutical companies. Their exact position in the rankings is dependent on whether the Bristol-Myers Squibb deal with Celgene is successful (rank 10 if the deal is successful but rank 9 if it isn’t), as this deal is worth more than the one between Takeda and Shire. Additionally, merging with the Shire means that Takeda’s footing in the American pharmaceutical industry has expanded.
This comes at a time when Japan has proven to be a difficult market to profit in due to the very strict regulations imposed on companies to facilitate price control mechanisms. However, it’s not as though these regulations don’t exist in America; it just so happens that the American market is so huge that companies are willing to confront them for the sake of greater rewards.
Though not all are in good spirits about the acquisition, including some within the Takeda family. By purchasing the Shire, Takeda now has to confront the debt they have inherited. While the CEO Weber has laid out plans for divesting non-core businesses in Japan, critics still did not approve and as a result, Takeda’s stock prices fell. Moody’s Investors Service even lowered its rating back in December.
Since March 2018, Takeda’s stocks had fallen by 26 percent, though once the deal was finalized, they rose by 2.3 percent. The most recent spike was an unprecedented high for the company by 7.5 percent.
The newly formed company’s primary focus will be oncology, plasma-derived therapies, gastroenterology, neuroscience, and rare diseases.