As it digests Shire, Takeda plans to shed $10B in non-core assets to relieve debt burden

After consummating his hefty $62 billion deal to buy Shire, Takeda’s Christophe Weber is dealing with the sticky issue of its ballooned debt burden with divestments of around $10 billion, the CEO of the biggest Japanese drugmaker told reporters at the JP Morgan conference on Tuesday.

The combined company, which is saddled with a reported $48 billion in net debt after the Shire takeover, is planning to shed “non-core” assets, including businesses from the $13.7 billion Nycomed acquisition executed in 2011, according to the Financial Times. Takeda $TAK bought the Swiss drugmaker for its smoker’s lung drug and its OTC portfolio in an attempt to expand its footprint in emerging markets, but as market conditions worsened, the deal invited a storm of criticism.

The company will likely sell Nycomed’s OTC business in Russia, Credit Suisse analyst Fumiyoshi Sakai said, cited by the FT. Other brands considered non-core that could be on the auction block include blood pressure drug Azilva, diabetes treatment Nesina and gout therapy Uloric, the report added.

Some critics have also questioned the value of the Shire deal, suggesting that the Irish companies’ assets will dry up in the next five to 10 years, and Takeda will once again have to look elsewhere to regurgitate growth, although Weber has rejected that assertion, saying the acquisition would drive long-term sustainable growth.

Aside from shedding business to relieve debt, Shire must also implement a solid plan to sort out integration with Shire, which will be Weber’s other priority going forward.

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