Takeda to offload Japan consumer health unit to Blackstone for $2.3 billion

August 26 2020

After months of rumors, Takeda has finally unveiled a deal to sell its Japanese consumer health business to Blackstone Group.

The U.S. private investment shop could pay JPY242 billion ($2.3 billion) for the business, helping the Japanese drugmaker hit its $10 billion divestment goal and pay down debt from the Shire acquisition. The actual price will be adjusted according to net debt and working capital, Takeda said.

The unit’s current management and workforce will stay put after the takeover, which is expected to close by March 31, according to Takeda.

“Today’s transaction will provide [Takeda Consumer Healthcare Company] with the ownership, resources and strategic focus to continue to thrive and meet the needs of customers, while further sharpening Takeda’s strategic focus and commitment to financial discipline and transforming science into life-changing medicines,” Takeda CEO Christophe Weber said in a statement on Monday.

Just as GlaxoSmithKline’s planning to do with its Pfizer consumer health joint venture, Blackstone aims to take the ex-Takeda business public in about five years, Atsuhiko Sakamoto, a senior managing director at the private equity firm, told Bloomberg.

“It has lost some market share in recent years due to lack of investment and new products. We want to put it on track for self-sustaining growth,” Bloomberg quoted Sakamoto as saying.

Before an IPO, the private equity firm aims to invest JPY 50 billion to strengthen the business’s performance through its sales networks and to launch new products, the news service reported.

Revenue from the over-the-counter business has been declining in recent years. In the fiscal year ended March 31, 2018, its sales totaled JPY79.9 billion. It dropped to JPY64.1 billion in the next 12 months and then to JPY60.9 billion in the fiscal year ended in March 2020.

Since the OTC unit was split into a separate business in April 2017, the competition in that market has increased, Takeda noted, adding that the unit needs a “much more agile business model” to strengthen its responsiveness to the market. Takeda is obviously not its best owner, given that the company is now focusing on five key business areas in branded prescription medicines.

Takeda, to cut back its debt load, has signed deals to sell off non-core assets in several regions, including in other Asia-Pacific countries, Europe, Latin America, the Russian Commonwealth states and the Middle East and Africa.