"Selecting the Best Amid Merger" Celltrion... Takeda Sells Asia-Pacific Rights

210 Billion KRW Scale... 50% Profit in 3 Years
Strategy to Retain Domestic Distribution Rights for Key Products
Focus and Selection Expected in New Drugs and Similars

The 'Integrated Celltrion,' launched through the merger of Celltrion and Celltrion Healthcare, has announced the sale of pharmaceutical distribution rights as its first business move. This decision is explained as a judgment to focus on the core businesses of new drug and biosimilar development while enabling early recovery of investment returns.

Incheon Songdo Celltrion Plant 2 Overview. / Incheon - Photo by Hyunmin Kim kimhyun81@

On the 2nd, Celltrion announced that it will sell part of the prescription drug (ETC) business rights from the 'Primary Care' business rights in the Asia-Pacific region, which it had acquired from the multinational pharmaceutical company Takeda Pharmaceutical, to CBC Group, a Singapore-based global healthcare-focused private equity firm.

In June 2020, Celltrion acquired rights to a total of 18 pharmaceutical products from Takeda, covering six over-the-counter (OTC) drugs such as the cold medicine 'Hwaituben' and the stomatitis medicine 'Albothyl,' as well as 12 prescription drugs (ETC) including diabetes treatments 'Nesina' and 'Actos,' and the hypertension treatment 'Edarbi,' across nine Asia-Pacific regions (South Korea, Thailand, Taiwan, Hong Kong, Macau, the Philippines, Singapore, Malaysia, and Australia). The acquisition amount was $278.3 million USD (approximately 360 billion KRW).

At that time, Celltrion appeared to be seeking new growth engines by securing stable sales in the synthetic drug (chemical) business through the acquisition of distribution rights. However, as the group's focus shifted to new drugs and biosimilars, the situation changed. In the merger plan emphasized repeatedly by Seo Jung-jin, Chairman of Celltrion Group, the 2030 sales target of 12 trillion KRW consists of 5 trillion from new drugs and 7 trillion from biosimilars, with no mention of chemical drugs. Accordingly, it is known that the sale process of these distribution rights began around June last year.

Seo Jung-jin, Chairman of Celltrion. Photo by Hyunmin Kim kimhyun81@

This sale of distribution rights covers all related business rights in the Asia-Pacific region except for the domestic distribution rights of the representative prescription drugs Nesina, Actos, and Edarbi. The sale price is 5.58 billion Thai Baht (approximately 209.9 billion KRW), about 1.5 times higher than the initially valued 138 billion KRW at the time of acquisition. Celltrion led an average annual sales growth of 13% over three years in the region after acquisition, and the amount reflects the increased business value due to business synergies such as cost reduction of key products through production internalization and the potential for developing improved new drugs for these products. The related sale process will be handled by Celltrion Asia Pacific (APAC), a 100% subsidiary of Celltrion holding the distribution rights, and is expected to be completed by March next year. The contracting party is HP Bidco 2 LLC, a special purpose company (SPC) established by CBC.

Celltrion excluded the domestic distribution rights of the three products Nesina, Actos, and Edarbi, which already show significant sales domestically, from this sale. Additionally, Celltrion Pharm will exclusively produce and supply these products in the eight countries excluding South Korea, ensuring stable revenue continuation. Regarding the OTC business rights, Celltrion stated that negotiations are in the final stages with a leading candidate for detailed coordination.

A Celltrion representative said, "This sale of business rights is a strategic decision made at the launch of Integrated Celltrion, aiming for selection and concentration as a management principle and securing liquidity through early recovery of investment returns, just before full-scale growth." They added, "Furthermore, by retaining the domestic business rights of key prescription drugs and securing stable profits through exclusive product supply, the sale will be successfully concluded." They also explained, "The secured sale proceeds will be invested in strengthening the new product portfolio and laying the foundation for sustainable growth of the Celltrion Group."