BioChem Pharma agrees to $13-billion merger

One of Canada's biggest drug companies, BioChem Pharma, is being swallowed by the Shire Pharmaceuticals Group of Britain as part of a $13-billion merger. The all-share deal to buy BioChem Pharma is worth $54.40 per share.

Biochem chief executive Francesco Bellini said the deal is a strategic move that will benefit both the company and its shareholders.

"The pharmaceutical industry is rapidly consolidating and new leaders are emerging. In this environment, scale and leadership are increasingly important," Bellini said in a release.

It's a change of tune for Bellini, the 53-year old co-founder, chair and CEO of BioChem Pharma. For a long time, Bellini vowed that the company would remain independent. Bellini owns 3 per cent of BioChem and will end up with 1.5 per cent of the merged company.

During a press conference, Bellini told reporters, "This was inevitable. You had to do it because if you don't do it, the growth will slow down. And then, what do you do?"

In a statement, Shire chief executive Rolf Stahel said the merger will "further broaden and diversify our revenue base, strengthen our early-phase pipeline and provide greater financial strength to capitalize on our search and development capability."

Shire Pharmaceuticals focuses on four therapeutic areas: central nervous system disorders, metabolic diseases, oncology and gastroenterology.

BioChem Pharma specializes in the prevention and treatment of human diseases, with a focus on infectious diseases and cancer. It leapt onto the world stage in the late 1980s with its first therapeutic drug, 3TC Epivir. The drug is now a central part of HIV infection/AIDS combination therapies, most recently launched as part of GlaxoWellcome's Trizivir therapy.

Another drug, Zeffix, is being introduced in key markets by GlaxoWellcome. Zeffix is an oral treatment for Hepatitis B.

Combined, the two companies will create a specialty pharmaceuticals company worth $13 billion. Shire would move up the ranks of the world's second-tier drug companies.

The news sent Shire's shares tumbling 14 per cent late morning Monday in Britain to 10.55 pounds. Shire's investors are concerned about share dilution. There are also some concerns about BioChem's track record in marketing its own drugs.

Shire's offer is almost 40 per cent more than BioChem Pharma's $40 closing price on Friday. BioChem Pharma's shares closed up 10 per cent, or $4.20, to $44.20 on Monday.