Nycomed lands Sterling Winthrop's imaging unit to cap week of deals

Norwegian firm plans R&D emphasis on ultrasound contrast

Thelast week of June was a frenzied time for observers of the U.S.pharmaceutical industry, but everything seemed to fall into placein the end. First, Eastman Kodak found a buyer for its SterlingWinthrop drug subsidiary in the form of French pharmaceuticalfirm Sanofi. With the ink barely dry on that deal, Sanofi saidit would sell the diagnostic imaging portion of its newly acquiredasset to Norway's Hafslund Nycomed.

The end result of last month's deal-making benefits all threecompanies. The sale of Sterling Winthrop enables Kodak to reducedebt and focus on its core imaging business, while Sanofi takesa major step toward expanding its North American presence. Atthe same time, Nycomed wins direct access to the North Americanmarket for its imaging products, which have been marketed in theU.S. by Sterling Winthrop.

Kodak of Rochester, NY, put Sterling Winthrop on the blockin May with the intention of reducing debt and streamlining thecompany (SCAN 5/18/94). Kodak emphasized at the time that thesale would not affect its Health Sciences division, which marketsfilm and electronic imaging products.

On June 23, Kodak said it would sell Sterling's pharmaceuticalbusiness to Sanofi for $1.675 billion in cash and Sanofi's interestin the European over-the-counter drug alliance between the twofirms. Kodak will add that business to Sterling's remaining OTCdivision, which Kodak also plans to divest.

Six days later, Sanofi completed the rest of the puzzle. Statingthat it did not wish to retain the diagnostic imaging portionof Sterling Winthrop, Sanofi said it would sell the diagnosticsunit to Hafslund Nycomed for $450 million. Sanofi will retainthe sub-license for x-ray contrast agent Omnipaque in Japan.

The transaction marks a dramatic entry for Hafslund Nycomedinto direct North American sales of many of its products, suchas Omnipaque and MRI agent Omniscan.

"The effect of this is that Hafslund Nycomed will have100% of the sales dollar for Omnipaque and other agents,"said David S. Talbot, vice president of Arnhold and S. Bleichroeder,financial analysts in New York City. "It means control overtheir own destiny rather than what existed under the prior arrangement.It's a very big plus for Nycomed."

Nycomed is not planning radical changes for Sterling Winthrop,according to Eric Cameron, senior vice president of corporatecommunications for the Oslo, Norway, firm. The acquisition shouldmove smoothly because of the long relationship between the twofirms: Sterling Winthrop has been the U.S. licensee for HafslundNycomed products for over 30 years.

Nycomed is acquiring Sterling Winthrop's diagnostics salesforce, R&D facilities and manufacturing operations as partof the deal. Sterling's sales force and production facilitieswill be integrated into Nycomed's as seamlessly as possible, Cameronsaid. There will be some consolidation of the combined R&Deffort of the two firms due to Sterling's duplication of the Norwegianparent's operations, however.

"We will adjust on the R&D side," Cameron said."We have parallel organizations that have been working toa certain degree along the same lines. We don't see any reasonto maintain these two structures unchanged."

Nycomed will maintain a strong investment in R&D to developnew x-ray and MRI contrast agents, Cameron said, but particularemphasis will be placed on commercializing new ultrasound agents.

Nycomed already has European rights for Molecular Biosystems'Albunex agent for myocardial perfusion imaging (SCAN 6/30/93).In addition to that and other agents, Nycomed is developing NUS,a third generation agent that is moving rapidly toward clinicaltrials, according to Cameron.

"In the years to come there will be even more emphasison ultrasound," he said.