Japan's Taisho buys select Asian assets from Bristol-Myers

Japan's Taisho Pharmaceutical will buy six Asia-Pacific brands and the Indonesian subsidiary of Bristol-Myers Squibb for $310 million, according to an announcement yesterday. It is paying $160 million for the brands and $150 million for the Indonesian company.

Taisho is acquiring the trademarks, product registrations and websites for Tempra, a fever-reducing medicine, Counterpain, an anti-inflammatory analgesic for application, and four other brands. Tempra is well-established in Indonesia and the Philippines, while Counterpain has a large share of the market in Indonesia and Thailand.

In addition to Indonesia, the Philippines and Thailand, the six brands also sell in Malaysia, Singapore, Hong Kong, Taiwan, Macau and 13 other countries in Asia-Pacific. China is excluded from the transaction, while Bristol-Myers Squibb's over-the-counter drugs business in Japan was acquired by Japan's Lion Corporation in mid-2007.

Tokyo-based Taisho will also buy Bristol-Myers' 97.97% equity stake in its Indonesian subsidiary, including the land, buildings, and other assets of the Indonesian company. Bristol-Myers Squibb Indonesia was established in 1970 to manufacture and sell OTC medicines. It employs 126 people, who will transfer with the company to Taisho. The Japanese buyer expects the Indonesian manufacturing facility will play a role as a production base for Taisho's future growth in Asia.

The deal, which was announced yesterday, entails a tender offer by Taisho to the shareholders of Bristol-Myers Squibb Indonesia. Including completion of the formalities related to the tender offer, the deal is expected to close by January 2010.

Taisho is advised by Daiwa Securities, with legal advice from Morrison & Foerster. Bristol-Myers Squibb is being advised by HSBC.

Taisho was founded in 1912 and made its first foray outside Japan in 1963, with health drink Lipovitan D. It has successfully positioned itself in the health drinks industry with locally incorporated companies in Hong Kong, Taiwan, Malaysia, the Philippines, Indonesia, Thailand, Vietnam and China. Taisho currently employs 5,400 people and had sales of ¥256 billion ($2.8 billion) in the financial year that ended March 31, 2009.

The brands it is acquiring will provide a platform for Taisho to make an entry into the Asian OTC market, said Taisho in a written statement regarding the deal. Taisho plans to combine its own knowledge and technology with the sales and distribution network that Bristol-Myers has established in Asia to grow sales of both the brands it is acquiring and its existing products. Taisho added that it intends to establish an office in a city like Singapore or Kuala Lumpur to manage its Asian business.

Taisho is following a strategy adopted by a number of Japanese firms, which are putting the surplus cash on their balance sheets to work to expand overseas. Since 2007 Japanese pharmaceutical firms Eisai, Takeda, Daiichi and Shionogi have all used M&A to grow the overseas component of their business. In the most recent deal in July, Hisamitsu said it will buy Miami-headquartered Noven Pharmaceuticals.