Last December P&G's then-CEO Alan Lafley moaned that the increasing complexity and expense of gaining a new drug approval had made the pharmaceuticals business far less profitable. Today, P&G announced a deal to sell its entire prescription drug division in a $3.1 billion deal with specialty drugmaker Warner Chilcott.
In addition to its entire pipeline of experimental therapies, Warner Chilcott bagged a group of branded drugs that includes Asacol HD (mesalamine) for ulcerative colitis, Actonel (risedronate sodium) for osteoporosis, and co-promotion rights to Enablex (darifenacin) for overactive bladder. The company also will take over manufacturing facilities in Puerto Rico and Germany.
The Wall Street Journal reported on Sunday that the deal indicated that big lenders are once again able to package together a multibillion-dollar leveraged loan. Nothing this big has been announced since the spring of 2008, as the economy was headed into a tailspin.
Quoting a source familiar with the deal, Bloomberg reported this morning that a group of banks had committed about $4 billion to the deal, which includes about a billion dollars to finance Warner Chilcott debt. Analysts have been predicting a buyout deal for much of the year, with several pegging the value of the unit at $3 billion to $4 billion. P&G wound up on the low end of that equation.