Warner Chilcott buying P&G drug business
Warner Chilcott buying Actonel, other P&G drugs for $3.1B to boost women's health, other lines
By Linda A. Johnson, AP Business Writer
On Monday August 24, 2009, 11:06 am EDT


TRENTON, New Jersey (AP) -- Shares of Irish drugmaker Warner Chilcott PLC jumped more than 26 percent Monday on news it will more than triple its revenue and dramatically expand its product lines by buying Procter & Gamble Co.'s prescription drug business for $3.1 billion.

Warner Chilcott, which specializes in women's health and dermatology products, will get a portfolio with $2.3 billion in annual sales, boost its offerings in women's health with a blockbuster osteoporosis treatment and get a toehold in the urology and gastroenterology markets.

The deal also brings the Ardee, Irish company an unspecified number of Procter and Gamble's prescription drugs in development and manufacturing facilities in Puerto Rico and Germany.

Just the top drug that Warner Chilcott gets in the deal, Actonel for osteoporosis, with more than $1 billion in annual sales, exceeds the company's 2008 revenue of $938 million. Warner Chilcott also gains colitis drug Asacol HD, bone drug Didronel and Enablex for overactive bladder.

"The acquisition of the P&G pharmaceutical brands and employee talent is a transformational, strategic move for us," said Roger Boissonneault, Warner Chilcott's president and chief executive.

Warner Chilcott's products include some well-known oral contraceptives -- Loestrin 24 FE, Femcon FE and Ovcon -- plus multiple treatments for menopause symptoms such as hot flashes and vaginal dryness, including Femhrt, Femring and Estrace. It also sells skin products such as acne treatment Doryx, Pyridium for pain from urinary tract infections, Moisturel cleansers and therapeutic creams for sensitive skin, Taclonex ointment for psoriasis and Sarafem, for severe physical and emotional problems linked to the menstrual cycle.

P&G last month sold Japanese market rights for its osteoporosis treatment to Ajinomoto Co. for $210 million.

The purchase expands Warner Chilcott's business into 14 new countries. Tom Millikin, spokesman for P&G's pharma business, said about 85 percent of the 2,300 employees in that business will transfer to Warner Chilcott.

"These types of transactions tend to be positive in the short term for acquiring companies, so (Warner Chilcott) may see an initial pop" in stock price, analyst Les Funtleyder at Miller Tabak & Co. wrote to investors. He added that the company "will have to execute well in order to see longer-term returns."

Warner Chilcott said it will borrow funds from a group of banks to complete the deal, which is expected to close by year-end.

Procter & Gamble said the sale will result in a one-time gain of $1.4 billion, or about 44 cents per share. Lost profit from the business and other costs will cancel out 10 to 12 cents per share. The company expects the sale to lower its profit in future years by 16 to 18 cents per share.

In the last year, Cincinnati-based Procter & Gamble has sold off other business including Folgers coffee and Noxzema skin care brand.

In New York trading Monday morning, Warner Chilcott shares surged $4.20 to $20.26, while Procter & Gamble shares rose 13 cents to $53.71.