AMSTERDAM With Dutch biotech Crucell CRCL.AS about to be gobbled up by U.S. giant Johnson & Johnson (JNJ.N), its chief executive Ronald Brus will need to deliver new vaccines quickly to make a success of the acquisition.
The deal looks in the bag after Crucell shareholders voted through changes to its statutes and approved the nomination of mostly J&J employees to its advisory board earlier on Tuesday.
Brus is set to stay on at Crucell's vaccine business following the 1.75 billion euro ($2.4 billion) deal, but will face pressure to roll out products with enormous financial potential such as flu vaccines as soon as possible.
His masterstroke at Crucell was to spot the gap in the market for vaccines against childhood diseases. He bought Swiss vaccine maker Berna Biotech in 2006. That gave Crucell the rights to Quinvaxem, which bundles vaccines against five common childhood diseases including diphtheria, tetanus, whooping cough, hepatitis B and influenza.
Quinvaxem proved to be Crucell's money-spinner, generating contracts worth more than $900 million since its launch in 2006 thanks to a supply relationship with UNICEF.
Today, children in mainly low-income countries are protected from disease by Quinvaxem, and Crucell turned from a loss-maker to profitability.
ING analyst Fabian Smeets said Brus's timing for the Berna deal was excellent. "If Crucell had not bought Berna Biotech, the company might not have been bought by J&J," Smeets said.
The question now for Brus, 47, is what's next if he's to take advantage of J&J's financial muscle and distribution network?
"Under Johnson & Johnson, they will have more money, greater distribution power, more experience in negotiations with regulatory authorities ... than on a standalone basis," said Rene Verhoeff, ABN AMRO analyst.
"But a lot still needs to be done to make an impact in the vaccine market, and their position today is still extremely small. They need to have products getting improved, and there is not much in late-stage development."
Besides Quinvaxem, Crucell sells vaccines for travelers and flu vaccines and is developing its own vaccines for rabies, malaria, tuberculosis, yellow fever and HIV. It is also developing cell-based flu vaccine technology, which can substantially reduce the time taken to produce the vaccine.
But its two most promising products -- the rabies vaccine and a universal antibody treatment that can treat multiple influenza strains -- could take years to come to market, and Brus has said the co-operation with J&J could help accelerate the development of Crucell's pipeline.
Once disdained as a low-margin business, the vaccines market has become far more interesting for big pharmaceuticals firms, because with so many patents expiring they are facing increasing competition from generic products.
"Others focus on lifestyle products or treating illness; we have mainly focused on disease prevention," Crucell Chief Financial Officer Leon Kruimer told Reuters.
Under Brus, Crucell grew to become the world's sixth-largest vaccine maker, with annual sales of 365 million euros last year, though it still ranks far behind rivals Novartis NOVN.VX, GlaxoSmithKline (GSK.L) and Sanofi Aventis (SASY.PA) in terms of sales.
(Editing by Sara Webb and Will Waterman)
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