German drug maker Hoechst AG and its subsidiary, BehringwerkeAG, are moving out of the vaccine business, selling 49 percent toChiron Corp. for about $118 million in cash and giving Chiron anoption to buy the rest over the next five years.
For Chiron, of Emeryville, Calif., the acquisition will more thandouble annual revenues from vaccines, whose development and salesare coordinated through Chiron Biocine with headquarters in Siena,Italy, and Emeryville.
Hans Kupper, head of business development and technology forBehringwerke, told BioWorld Today, "Hoechst has not identifiedvaccines as a core business," deciding instead to seek a joint venturewith the possibility of ending its involvement.
Hoechst gave Chiron an option to buy the other 51 percent ofBehringwerke's vaccine business for $123 million beginning inMarch 1998. The option is renewable each March through 2001. IfChiron does not take over the joint venture by March 2001, Hoechstcan sell it to Chiron for $123 million. The total buyout price wouldincrease based on annual interest accrued by the principal amount.
Behringwerke, of Marburg, Germany, is the largest vaccine supplierin Germany. The vaccine business, which is profitable, generated1995 revenues of $165.6 million. Behringwerke makes and sellsvaccines for polio, flu, diphtheria, tetanus, pertussis, rabies,tuberculosis and cholera. The company's tick-borne encephalitisvaccine is the biggest seller, generating 16 percent of the totalrevenue.
Behringwerke's vaccines, Kupper said, account for 15 percent of thecompany's revenues. The company's other businesses include bloodplasma products and diagnostics.
Chiron Biocine, whose sales largely are in Italy, generated about $75million in revenues in 1995 with the greatest percentage coming fromits genetically engineered acellular pertussis vaccine.
In forming a joint venture with Behringwerke, Chiron's vaccine-related revenues, based on Behringwerke's 1995 sales, wouldincrease by $81 million. The joint venture also will distribute ChironBiocine vaccines in Germany.
Under terms of the agreement, Chiron will receive 49 percent ofBehringwerke's pre-tax profit from its vaccine business. Officialsfrom the two companies declined to reveal the 1995 profit.
Neither Chiron nor Behringwerke has vaccines on the U.S. market.
Larry Kurtz, Chiron's vice president of corporate communications,said the company expects to file a new drug application with the FDAfor the acellular pertussis vaccine by the end of March 1996.
Acellular pertussis vaccines are being developed to counter sideeffects triggered by whole cell versions. The pertussis vaccines areused in conjunction with diphtheria and tetanus vaccines to inoculatechildren.
Kurtz said the joint venture between Chiron and Hoechst is based ona long association between the two companies dating to 1981 whenChiron was founded. The earliest collaboration involveddevelopment of a form of the thrombolytic t-PA. In succeeding years,Kurtz said, Chiron has licensed production technologies to Hoechst.
The vaccine joint venture could lead to other alliances, Kurtz added,in combinatorial chemistry, diagnostics and gene therapy.
To acquire 49 percent of Behringwerke's vaccines business, Kurtzsaid, Chiron may use funds from a $425 million line of creditextended by its partner, Ciba-Geigy Ltd., of Basel, Switzerland.However, Kurtz added, a final decision has not been made.
In its purchase of 49.9 percent of Chiron in late 1994, Ciba agreed tolet Chiron borrow money at the same interest rate the Swisspharmaceutical company is charged.
Chiron's stock (NASDAQ:CHIR) closed Tuesday at $109.25, down$4.75. n
-- Charles Craig
(c) 1997 American Health Consultants. All rights reserved.