Celltrion has emerged as the winner of a bidding war for Japanese pharmaceutical giant Takeda’s primary care business, gaining a foothold to further expand operations in the global market.

The South Korean biopharmaceutical company agreed to buy Takeda’s six over-the-counter (OTC) brands and 12 prescription pharmaceutical assets sold in the Asia-Pacific region for $278 million. This includes $266 million upfront in cash and up to an additional $12 million in potential milestone payments, according to a regulatory filing on June 11.

Celltrion plans to set up a wholly owned subsidiary in Singapore – tentatively called Celltrion AP – that will acquire the assets from Takeda. The acquisition will be funded through a mix of cash on hand and borrowings and is expected to be complete during the fourth quarter of 2020.

The deal has allowed Celltrion to have licenses to operate in nine Asia-Pacific markets. Apart from the domestic market, the remaining eight markets include Australia, Hong Kong, Macau, Malaysia, Philippines, Singapore, Taiwan and Thailand.

Drugs for chronic diseases such as diabetes, hypertension and hyperlipidemia were also among the assets included in the deal. That was part of the reason that several other domestic pharmaceutical companies, including Yungjin Pharm and Dongwha Pharm, that were seeking to expand its product portfolio into this segment had joined in the bidding war last fall.

The majority of the bidders had reportedly offered more than 300 billion won ($248 million) with little difference in their bid prices so the seller would have placed weight on non-price factors, industry watchers said.

“There were rumors that the deal could have fallen through due to a negative impact of Covid-19 but negotiations did continue between the seller and the bidders,” an industry insider said. “Many contenders participated in the bidding with most of them offering more than 300 billion won for the subject assets.”

Celltrion, which pledged to investors more than 2 trillion-won in revenue for this year, is said to have shown strong interest in Takeda’s primary care division for growth. Samil PwC, acting as financial adviser to the company, estimated the division’s value between 295.1 billion won and 391.6 billion won based on a discounted cash flow method.

While offering a competitive price to the seller, Celltrion also suggested more favorable non-price terms to the seller than other contenders, such as keeping full employment of existing workers. This appears to have played a key role in the company winning the deal, industry watchers said. (Reporting by Ar-rum Rho)