Bristol Myers Squibb sells off wound care division
Drugmaker Bristol Myers Squibb (BMS) announced it has sold off its ConvaTec division to a private equity consortium for $4.1 billion. The buyers were Avista Capital Partners (US -based) and Nordic Capital (European). These two companies own Denmark-based pharmaceutical company Nycomed.
The division specializes in therapy and surgical care, in such areas as wound care and colostomy equipment. The company had also recently cold its 525 million (€339.63 million) sale of the company's medical imaging unit to Avista for $525 million. The company also plans to cut 10% of its jobs and sell of part of its Mead Johnson Nutritionals unit.
The reason? The company is intent on moving into the biopharmaceuticals area, and the cash will be used for further acquisitions.
As an AP story ("Bristol-Myers Squibb sells ConvaTec business unit for $4.1 billion to Nordic Capital Fund", 5/2/07) notes "Bristol-Myers and many of its peers have been on a mission to reinvent themselves as blockbuster drugs lose patent protection and generic drug developers cut into their revenue drivers."
Of course, that's a strategy other pharma companies are trying with mixed results - the days of the innovative and wide-selling drug breakthrough seems to be near an end. While the big companies need to buy out innovative biopharmaceutical companies to keep the pipeline running, there have been few big moneymakers comparable to patent drugs like Pravachol and Plavix, two current BMS drugs.
One aspect of this story is that it's one f the few major private equity buys in the past few months, and it is a sign that credit markets are making at least some big loans.
