Despite Takeda denials of bid for Nycomed, such a deal makes sense, says Datamonitor

Last week saw Japan’s largest drugmaker Takeda (TSE: 4502) take the unusual step of actually commenting on rumors when these surfaced about a potential $10-$14 billion acquisition of privately-held Swiss pharmaceutical firm Nycomed (The Pharma Letter May 12 and 13). However, the logic and value of such a deal nevertheless stands, says an analyst at Datamonitor, whose comments and analysis of both companies’ businesses follow for the interests of our readers. And who knows, a deal could eventually still be struck.

The business information group’s John Shortmoor says: “The continued strength of the Japanese yen in the global economy, fast-approaching generic pressures and a strong strategic rationale all contribute to the validity of this rumored deal. This would be the largest acquisition in Takeda's history, surpassing the $8.8 billion purchase of Millennium.

“A merger with Nycomed would represent a deviation from the recent M&A strategy exhibited by Japan’s number-one ranked drug manufacturer, with Takeda having been hugely active in deal making focused largely on obtaining intellectual property in the biotech/oncology sector, highlighted by billion-dollar transactions for Millennium (adding the drug Velcade[bortezomib for multiple myeloma]) and Amgen’s Japanese unit. However, while Takeda’s larger acquisitions have followed a firm therapeutic route, it has also steadily utilized its strong cash position to gain development and commercial rights for products specifically in the European markets.