Chugai Pharmaceutical Co. and F. Hoffmann-La Roche Ltd. announced Monday that they will enter a strategic tieup that will place the Japanese drug maker under the umbrella of its Swiss partner but retain the Chugai name.
The deal will enable the Roche group to establish a strong base for the development and sale of new products in Japan while helping Chugai engage in global research and development operations, they said.
It will also boost Chugai to fifth in the domestic market for sales of medical drugs.
The deal calls for Chugai to merge with Roche's wholly owned subsidiary, Nippon Roche K.K., in the fourth quarter of 2002. Chugai will be the surviving entity in the merger and will remain listed on the Tokyo, Osaka, Nagoya and Fukuoka stock exchanges.
The Swiss company will acquire a 50.1 percent equity stake in Chugai as well as a tender offer and a third-party allotment of new Chugai shares.
Chugai will become Roche's sole operational outlet in Japan's pharmaceutical market and be given priority to develop and sell new drugs subject to development and marketing by the Roche group.
The merger will boost Chugai's annual sales to 253 billion yen, making it fifth in the domestic market for medical drugs, the company said.
The Roche group's estimated sales -- including those of Chugai -- would total some 2.3 trillion yen, based on its performance in 2000, putting the group among the world's top 10 drug makers.
Before they consummate the deal, Chugai will spin off Gen-Probe Inc., its wholly owned U.S. unit, because the California-based maker of diagnostic drugs makes products that compete with those of Roche.