Taking Sciele Pharma private by tender offer to build a first real US sales base (2008)

What it means to buy a distribution network

The core of this decision is that an overseas sales network — an asset that normally takes years to accumulate — was obtained all at once by buying the company that already had one. Building a therapeutic-area sales organisation in the United States from zero was unrealistic at the revenue scale of a mid-size Japanese maker, and Teshirogi, newly installed as president, chose to take in a functioning sales force and its channels together with the time they represented, in exchange for a price of roughly ¥150bn. The design of the judgement shows in how a defensive idea — avoid going in alone on Crestor as a single product — became an offensive instrument: acquiring someone else's distribution.

What followed also shows that an acquisition's significance need not unfold as intended. The picture of growing the top line through the company's own selling receded behind a light profit model built on HIV royalties, and the American base founded on Sciele was reassigned a role inside the infectious-disease strategy. Even so, it is no small thing that a company which had always handled overseas markets by out-licensing came to own a sales platform of its own for the first time. How the choice to buy a distribution network pays off over the long run will be measured as Shionogi consolidates a structure for competing globally in infectious disease.