September 1, 2008 / 7:10 AM / 11 years ago

RPT-UPDATE 2-Japan's Shionogi to buy Sciele Pharma for $1.1 bln

(Repeats to additional clients) (Updates with details, background)

By Mariko Katsumura and Yumiko Nishitani

TOKYO, Sept 1 (Reuters) - Shionogi & Co (4507.T) plans to buy U.S.-based Sciele Pharma Inc SCRX.O for $1.1 billion, the fourth big overseas deals in nine months by Japanese drug makers eager to expand overseas.

The bid, which follows acquisitions by Takeda Pharmaceutical Co Ltd (4502.T) Daiichi Sankyo (4568.T) and Eisai Co Ltd (4523.T), is aimed at building Shionogi’s sales network in the United States.

“As we have moved ahead on improving our product pipeline, we have been faced with increasingly imminent challenge of getting a hold of a sales network in the world’s largest market,” Shionogi president Isao Teshirogi told a news conference.

Teshirogi added that Sciele should also help it in gaining approvals for new drugs from U.S. regulators.

For Sciele Pharma, which specialises in branded prescription products focused on cardiovascular, diabetes, women’s health and pediatrics, the deal comes as it faces a possible plunge in revenue due to generic competition for its No.1 drug.

Shionogi said it would offer $31 per Sciele Pharma share, a 61 percent premium to Sciele’s close of $19.27 on Friday, costing $1.1 billion. Shionogi’s total bill comes to $1.42 billion including $325 million to redeem senior convertible notes.

The bidder said it would likely finance the purchase with 47 billion yen in cash and 110 billion yen in bridge loans.

Shares of Shionogi, whose mainstay business is antibiotics, closed down 0.6 percent at 2,460 yen ahead of the announcement.

Eager to expand globally, Japanese pharmaceutical makers have been ploughing money made on top-selling drugs into acquisitions.

Takeda, Japan’s larget drug maker, bought U.S. biotech firm Millennium Pharmaceuticals in April for more than $8 billion. In June, Daiichi Sankyo bid up to $4.6 billion for control of India’s Ranbaxy Laboratories, while Eisai Co Ltd (4523.T) snapped up cancer specialist MGI Pharma Inc in December for $3.9 billion.

The deal is also the latest in a string of overseas acquisitions by financially sound Japanese companies hunting for opportunities outside their home market.

Already this year, announced outbound acquisitions from Japan total $42 billion, according to Thomson Reuters data, nearly double the figure for all of 2007.

Shionogi’s biggest product is cholesterol drug Crestor, with most of the income from that medicine coming through a licence fee from Anglo-Swedish drug firm AstraZeneca Plc (AZN.L).

Sciele is rushing to promote newly approved forms of its blood-pressure drug, Sular, after ending sales of the older version earlier this month. The move could counter potential competition from low-cost generic versions of older Sular.

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