Big pharma eyes Crucell
January 14th 2009 Printer version
FROM THE ECONOMIST INTELLIGENCE UNIT
Vaccines maker Crucell is in talks with Wyeth, but other members of Big Pharma are circling the Dutch drug company too.
Crucell, headquartered in Leiden, the Netherlands, is the sixth largest vaccines company worldwide and one of the few remaining independents in its field. It has seven approved vaccines in its portfolio, and operates in three main areas: paediatric, travel and endemic, and respiratory. Its strengths include its proprietary technologies, which are helping to change the way in which vaccines are produced. These include its PER.C6 human cell line technology for the development and large-scale manufacture of vaccines and other biopharmaceutical products. The company notched up sales of almost €190m in the first nine months of 2008, and reported its first quarterly profit, of €12.3m, in the three months to end-September. Crucell’s share price has jumped sharply in the wake of the takeover rumours, and its market value stood at around €1.1bn (US$1.5bn) in mid-January, somewhat above the US$1.35bn that Wyeth has reportedly offered to pay for the company.
Complementary programmes
Crucell is itself the product of several acquisitions, notably that of Swiss-based Berna Biotech in 2006. A deal with Wyeth would provide it with capital at a time when smaller biotech companies are finding it hard to raise funds via banks or the stockmarket. For Wyeth, one of the world’s top ten pharmaceutical companies by sales, the acquisition of Crucell would add further shine to its already strong vaccines portfolio. One of Wyeth’s leading products is Prevnar, a biotech-based vaccine to prevent pneumococcal disease in children, which achieved sales of US$2.4bn in 2007, making it the world’s best-selling vaccine. Analysts believe that the vaccines development programmes of both companies would be complementary. A tie-up would also be consistent with Wyeth’s increasing focus on biotechnology, which now represents around one-third of revenues for the Madison, New Jersey-based firm.
Wyeth has made few acquisitions in recent years, but under Bernard Poussot, the company’s CEO since the start of 2008, this may be starting to change. In December 2008 the company bought Thiakis, a small UK-based biotechnology concern specialising in the development of obesity drugs, for around US$30m plus potential milestone payments of up to US$120m.
Bidding war?
But Wyeth may not be alone in exploring the possibility of acquiring Crucell. According to Les Echos newspaper, Sanofi-Aventis, the world’s third largest drug company, could also be interested in making an offer. Such a deal would make considerable sense for the French company, which already operates a significant vaccines business, Sanofi Pasteur, which recorded sales of €2.78bn in 2007. In mid-2008 it bought another vaccines company, Acambis of the UK, for US$546m. Moreover, Crucell and Sanofi already collaborate on the development of influenza and rabies vaccines. A bid for Crucell would be one way for Sanofi’s new CEO Chris Viehbacher, formerly of GlaxoSmithKline (itself another key player in the vaccines sector), to make his mark.
A third possible suitor could be Swiss pharma giant Novartis. It purchased another leading independent vaccines company, Chiron of the US, in 2006, and as a result of this deal operates a strategic partnership with Crucell regarding Quinvaxem, a vaccine against five childhood diseases.
The attraction of vaccines
It is perhaps not surprising that a vaccines specialist like Crucell should prove interesting to big pharma, which is battling against healthcare cost-containment policies and patent expiries on a number of key products. Other independent vaccines companies, such as Intercell of Austria, are also potential takeover targets. Vaccines have been shaking off their somewhat dull image and look set to be one of the fastest growing and most profitable segments of the pharmaceuticals market in coming years. In part this is because they are regarded as a cost-effective means of combating disease by governments and other healthcare payers in both industrialised and developing countries. In addition, the list of diseases that vaccines are able to target is growing. There is considerable interest in the potential of vaccines to prevent or treat certain forms of cancer, for example. Meanwhile, concerns about flu pandemics and bioterrorism attacks, which have prompted official stockpiling of various vaccines in recent years, have not gone away.