Dive Brief:
- Takeda announced Wednesday it entered into an agreement to divest its TachoSil Fibrin Sealant Patch to Johnson & Johnson subsidiary Ethicon for approximately $400 million in cash, an effort to deleverage its business.
- The Japanese drugmaker borrowed $30 billion to finance its $62 billion acquisition of Shire that closed in January, restricting Takeda's financial flexibility. Selling off TachoSil will help Takeda make progress towards its goal of reducing its net debt to two times earnings before EBITDA over the coming years.
- TachoSil, a surgical patch designed to control bleeding, contributed $155 million in net sales to Takeda's bottom line during the 2018 fiscal year.
Dive Insight:
Under the divestiture, set to close in the second half of 2019, Ethicon is acquiring the assets and licenses for TachoSil's manufacturing, licensing and commercialization, but not the facility that currently produces the patch.
Takeda's manufacturing facility in Linz, Austria will continue to make the surgical patch for Ethicon, which entered into a long-term manufacturing agreement with Takeda. The Japanese company said it will manufacture TachoSil products and supply them to Ethicon.
Selling TachoSil will allow Takeda to focus on core pharmaceutical business units — gastroenterology, rare diseases, plasma-derived therapies, oncology and neuroscience — and help pay down its debt.
"These initial divestitures represent important steps in advancing the growth strategy Takeda outlined following our transformational acquisition of Shire earlier this year," Takeda CEO Christophe Weber said in a statement.
Takeda CFO Costa Saroukos told investors on the company's third quarter earnings call in February the five core business units constitute 75% of the combined Takeda-Shire company.
"All other areas are non-core basically, and they represent 25%. And these are the areas that we're looking at for potential divestitures," Saroukos said.
Takeda said it does not expect the divestiture to have a material impact on its fiscal year 2019 forecast, which is set to be announced May 14. For Johnson & Johnson, the $400 million deal builds on its first quarter spend of $1.68 billion in net cash paid for acquisitions.
"The FY2019 forecast will be updated at a later date to reflect these divestitures once a reliable estimate of their impact can be made, which will depend upon the exact timing of transaction close," the company said.
