Haisen BioPharma's Strategic Acquisition of Takeda's China Portfolio: A Move Towards Chronic Disease Focus and Global Expansion
According to overseas news, on December 21, 2020, Takeda Pharmaceutical Company announced that it had signed an agreement with Haisco Pharmaceutical Group Co., Ltd. to divest part of its prescription drug business in mainland China to Haisco. Upon meeting regulatory requirements and completing the transaction, Takeda will receive a total transaction amount of $322 million (approximately RMB 2.108 billion).
According to publicly available financial reports, Takeda Pharmaceutical, as the seller, has successfully broken into the top ten global pharmaceutical companies, surpassing AstraZeneca, Amgen, and others, following its acquisition of Shire. In contrast, the buyer in this transaction is a little-known Chinese biopharmaceutical company, Haisen Biopharma.
Although this transaction represents one of Takeda Pharmaceutical’s rare major moves in China, similar deals have occurred frequently on a global scale. From 2019 to 2020, Takeda Pharmaceutical has been reshaping its product pipeline portfolio by divesting product rights.
An analysis of Takeda’s divestiture transactions since 2019 reveals that acquirers have included both multinational pharmaceutical companies—such as Novartis, which acquired the dry eye disease drug Xiidra for $5.3 billion, and Johnson & Johnson, which purchased the surgical hemostatic patch TachoSil for $400 million—and regional leaders, such as Hypera Pharma, which acquired the Latin American rights to 18 branded prescription and consumer healthcare products for $825 million, and Acino International, which secured the Middle Eastern and African market rights to approximately 30 over-the-counter (OTC) and prescription drugs for over $200 million. Notably, while Orifarm acquired the rights to a portfolio of OTC and prescription medicines comprising 110 non-core European products for $670 million, it also purchased two of Takeda’s manufacturing facilities in Denmark and Poland.
For Takeda, the primary objectives of divesting these product pipelines include two aspects:
Takeda Pharmaceutical has long been one of the most renowned global developers of rare disease therapies. Following its acquisition of Shire in 2018, it solidified its position as the world’s leading player in the rare disease sector. Innovation is the key to success in this field. Therefore, in the foreseeable future, Takeda will continue to focus its strategic efforts on the research, development, and promotion of innovative products. In a press release, Takeda also stated that it will further increase its investment in the Chinese market, with plans to launch more than 15 innovative drugs over the next five years.
Over the past two years, Takeda has focused its core business areas on gastroenterology, rare diseases, plasma-derived therapies, oncology, and neuroscience. The non-core businesses divested this time consist of Takeda’s cardiovascular and metabolic product portfolio sold in China, which is clearly no longer a strategic priority for Takeda Pharmaceutical. Choosing short-term pain over long-term suffering, this divestiture represents a significant decision in Takeda’s strategic focus.
Another reason for Takeda Pharmaceutical’s frequent asset sales is its current debt burden. Although the $62 billion acquisition of Shire propelled Takeda into the ranks of the top ten global pharmaceutical companies, it also saddled the company with substantial debt. According to Takeda’s financial reports, as of March 31, 2020, Takeda’s total assets reached ¥12.82 trillion (approximately $123.8 billion), while its total liabilities amounted to ¥8.09 trillion (approximately $78.2 billion). Consequently, after finalizing the Shire acquisition, Takeda embarked on a continuous “streamlining” strategy, divesting portions of its product pipeline that were no longer aligned with its core focus.
In its latest press release, Takeda explicitly stated that “from fiscal year 2021 to fiscal year 2023, it will continue to repay debt with proceeds from business divestitures, thereby accelerating its deleveraging process.” This indicates that the current transaction is merely the first step in Takeda Pharmaceutical’s large-scale pipeline divestment strategy in China. In the coming years, the continuous divestiture of “non-core” product pipelines will remain a standard practice for Takeda Pharmaceutical.
The need for business focus, on the one hand, and the imperative to monetize assets for debt repayment, on the other, have jointly shaped Takeda Pharmaceutical’s current strategic choices.
So, what is the background of the acquirer in this transaction, Haisen Biopharmaceutical?
Takeda’s recent series of asset divestitures have been acquired by major international institutions. In addition to those previously mentioned, these include Oscar A-Co KK (controlled by Blackstone), Orifarm, Cheplapharm, and Corza Health. Haishen, the acquirer in this transaction, is a newly established company and remains somewhat enigmatic and unfamiliar.
According to VCBeat, Haisen Biopharmaceutical Co., Ltd. was established in September 2020 as an innovative biopharmaceutical technology enterprise invested and organized by the Feidong County government of Hefei City through Anhui Ruimu Investment Management Co., Ltd. (an investment management company funded and organized by the Feidong County government of Hefei City, with a focus on biopharmaceuticals). The company is headquartered at the Changlinhe International Medical Port near Chaohu Lake in Hefei, adjacent to the Binhu National Forest Park. In short, the financial backer behind Haisen is Hefei, a local government engaged in industrial investment.
Hefei has successfully fostered three national strategic emerging industry clusters—new display devices, integrated circuits, and artificial intelligence—by leveraging its distinctive innovation-driven investment model, which helped cultivate renowned projects and enterprises such as BOE, ChangXin Memory Technologies (CXMT), and NIO.
The biopharmaceutical industry has never been Hefei’s strong suit. The Hefei government’s aggressive entry into the sector through the acquisition of Takeda’s assets inevitably raises questions about the underlying investment logic and strategic intentions.
As an investor in Heisen Biopharma, Ruimu Investment is an investment vehicle specifically established by the Feidong County Government to strategize its layout in the biopharmaceutical sector and build an International Pharmaceutical Port. Its core team members have previously held senior executive positions at renowned international pharmaceutical companies, possessing specialized and international expertise in regulatory affairs, marketing, and business expansion. With offices and operational teams in Beijing, Shanghai, and Mumbai, Ruimu Investment has formed collaborations with more than 30 international pharmaceutical enterprises across Japan, India, Europe, the United States, and other countries and regions. It has established a robust pipeline of mature overseas pharmaceutical products and a collaborative framework for the joint development of innovative drugs. These pipeline resources are expected to provide ample drug reserves to support Heisen’s future growth.
Haisen’s strategy is to rapidly evolve into a fully integrated pharmaceutical company encompassing R&D, manufacturing, marketing, and commercial operations by leveraging joint ventures, independent R&D, and the licensing or acquisition of mature or patented overseas products. The company will place particular emphasis on the domestic market for age-related degenerative diseases. In addition to its product portfolio, Haisen will build a comprehensive commercialization team characterized by extensive experience, rigorous training, and strong capabilities in promoting innovative drugs, thereby creating a synergistic chain reaction between the acquired products and other assets in Ruimu Asset Management’s pipeline.
It is also understood that Feidong County began preparing for its strategic layout as early as two years ago, acquiring an Italian R&D institution and an overseas CRO company, and promoting pharmaceutical cooperation between China and India. In this light, the recent acquisition of Takeda’s pipeline is not a whim but another key link in its industrial chain strategy. We will continue to closely monitor how these high-quality assets and projects will synergize and whether there are any follow-up plans.
In recent years, multinational pharmaceutical companies have accelerated their focus on innovation, with the most typical example being Pfizer’s divestiture of its generic drug business to establish Upjohn (which has since merged with Mylan and been renamed Viatris).
A pharmaceutical company’s pipeline strategy must align with its core development direction; products that deviate from this primary focus often become burdensome liabilities. Expanding into additional therapeutic areas necessitates extra management and sales teams. A large team incurs prohibitive costs, making the venture economically unviable, while a small team fails to achieve effective sales promotion. Faced with this dilemma, a strategic alternative—selling such products to more suitable companies—often emerges as the optimal solution.
Therefore, the divestiture of product pipelines is not a process for pharmaceutical companies to dispose of non-performing assets during their development, but rather an optimal strategic choice in their growth trajectory.
Licensing transactions have become a norm in the biopharmaceutical industry. On the surface, licensing deals appear to be merely a reallocation of pipeline assets; in essence, however, they represent the maximization of drug pipeline value. Divested assets are not devoid of market value—in fact, the opposite is true. Acquirers are willing to pay substantial premiums for these pipelines precisely because they can generate higher sales beyond the assets’ original value or create synergies with their own product portfolios.
In innovative pharmaceutical companies, the model of “in-house R&D plus in-licensing” has become virtually standard. First, in-licensed product pipelines can help these companies recoup a portion of their capital quickly through sales of in-licensed products while advancing their internally developed candidates. Second, in-licensed products can create synergies or differentiated positioning relative to in-house products, thereby enriching the company’s overall pipeline. Third, clinical development and commercialization of in-licensed products provide early opportunities to hone clinical and sales teams, building experience for future product portfolio expansion.
Moreover, in terms of pipeline value, the assets divested by Takeda Pharmaceutical in this transaction are by no means insignificant.Taking Yading (urapidil) as an example, this product was included in the list of urgently needed drugs in 2017. With broad indications targeting more than 7 million patients suffering from hypertensive emergencies annually, it not only boasts substantial market potential but also, against the backdrop of the “Healthy China 2025” initiative and in synergy with the development of stroke centers and chest pain centers, can help more patients achieve higher survival rates. Beyond the product itself, Haisen will also fully integrate a commercialization team characterized by extensive experience, rigorous training, and strong capabilities in promoting innovative pharmaceuticals. Haisen may be playing a larger strategic game, aiming to trigger a chain reaction between the acquired products and other assets in Rium Asset Management’s pipeline, thereby establishing a foundational base for the biopharmaceutical industry in Hefei.
According to the news report, in fiscal year 2019, the net sales of these products reached nearly $109.5 million, with the primary contribution coming from cardiovascular products such as Ebrantil. Publicly available data corroborate these figures. According to Menet, urapidil is the top-selling antihypertensive drug, with its annual sales exceeding RMB 1 billion for the first time in 2019 and achieving a growth rate of over 10% in each of the past two years. Despite intense competition from numerous generic alternatives, Takeda’s market share has remained stable at approximately 60%.
Therefore, against the backdrop of the normalization of licensing transactions in the biopharmaceutical industry, it is inappropriate to make superficial judgments based solely on the “prestige” of the participating pharmaceutical companies. Most pipeline transactions can still achieve a “win-win situation” by facilitating mutual benefit and complementarity. The acquisition of Takeda’s assets by Hefei also reveals a clear trajectory: “introducing high-quality overseas assets, leveraging the capacity of the domestic market, and promoting dual circulation and innovative collaboration.” This acquisition leaves ample room for speculation on whether it can foster new international synergies in the pharmaceutical industry and establish new models for pharmaceutical industry upgrading.