Abbott Laboratories Wednesday said it agreed with Japanese partner Takeda Pharmaceutical Co. to split up their decades-old drug-sales joint venture, TAP Pharmaceutical Products Inc.
Takeda, Japan’s largest drugmaker, long has been interested in taking full control of TAP, a multibillion-dollar operation the companies formed in 1977.
But the two partners have had difficulty in the past settling on a buyout price, with its value deteriorating in the face of rapidly slowing sales of both of TAP’s flagship drugs, the prostate cancer drug Lupron and heartburn drug Prevacid. The venture also had an embarrassing history of a major fraud settlement and rancor between Abbott and Takeda over how TAP should be run.
Under the accord, the two companies announced they will “evenly divide the value” of the joint venture, which had $3.1 billion in sales last year. That resolution is in sharp contrast to past speculation of an outright sale to Takeda.
The split calls for North Chicago-based Abbott, which is developing an oncology franchise, to receive rights to Lupron, a drug with $600 million in annual sales, and its product-support staff of about 300 employees. Abbott also will receive $1.5 billion in cash over the next five years based on TAP’s sales of Prevacid, as well as future products in developmental stages that may include a gout treatment and a potential heartburn treatment successor to Prevacid.
Takeda, in turn, receives the rights to Prevacid, which had revenue last year of nearly $2.3 billion. Because Prevacid loses patent protection next year and already is losing sales to similar drugs, cash payments will limit Abbott’s exposure to that loss, analysts indicate.
Takeda, which operates its North American headquarters in Deerfield, will transfer nearly 3,000 TAP employees to Takeda, including about 1,000 local employees. Abbott will take over the TAP office building in a Lake Forest office park once the deal closes in 30 to 60 days.”We have the opportunity to make a strategic change that equally splits the assets in a way that will benefit both Abbott and Takeda,” Abbott Chief Executive Miles White said.
In the U.S., Takeda is attracted to a market that has no price controls like Japan, so profits are more plentiful. Takeda sells the diabetes drug Actos and the sleeping pill Rozerem.
“This size and talent base creates a tremendous platform for continued growth in the world’s largest pharmaceutical market, which plays a significant role in Takeda’s ongoing growth,” said Yasuchika Hasegawa, who once ran TAP and is now president of Takeda in Japan.
Abbott and Takeda called TAP “one of the most successful joint ventures in the history of American business.”
But in 2001, TAP resolved criminal and civil allegations brought by the Justice Department by paying a settlement of more than $880 million and pleading guilty to a criminal charge of conspiring with doctors to bill government insurers for free samples of Lupron.
Takeda and Abbott also disagreed on who should run TAP. A decade ago, under former Abbott CEO Duane Burnham, the two parties ended an agreement that would have allowed TAP to sell certain drugs such as Actos. After that disagreement, Takeda started its own U.S. operation so it could sell the drug here.
As part of the breakup announcement, TAP President Alan MacKenzie was promoted to CEO of Takeda Pharmaceuticals North America, replacing Mark Booth, who will leave the company.
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