Celltech and Chiroscience merge to create European biotechnology powerhouse

Celltech and Chiroscience of the UK are to merge to become one of thelargest biotechnology companies in Europe. The deal, creating Celltech Chiroscience plc, will be made on the basis of 62 new Celltech shares for every 100 Chiroscience shares, giving the former's stockholders a 52.4% stake in the firm. The new company is valued at L696 million ($1.19 billion) and will be headed by Peter Fellner, Celltech's chief executive.

Celltech's finance director Peter Allen, who will be chief operating officer for the new entity, told the Marketletter that he had long been convinced of the importance of creating critical mass within the UK biotechnology field. The new company claims to have "one of the strongest, widest and most innovative new product portfolios in the European biopharmaceutical sector," including one product approved, ie Chiroscience's long-acting local anesthetic Chirocaine (levobupivacaine), three others in advanced trials and a further eight products either in clinical or in preclinical development.

The enlarged group will have an R&D budget of approximately L51 million and a research staff of 400. It was also claimed that "appreciable cost savings" can be achieved, particularly by eliminating duplication from the combined infrastructure, and one of Celltech Chiroscience's key goals will be to become financially self-sustaining and profitable. "In recent years, both Celltech and Chiroscience have moved significantly closer to achieving this," the companies claim.