Japan's Takeda Pharmaceutical Co is in talks to buy privately-held Swiss rival Nycomed for more than $12 billion, seeking to boost its presence in Europe and emerging markets, said two sources with direct knowledge of the matter.

The purchase, Japan's second biggest of an overseas firm, would help the nation's largest drugmaker to gain a lung disease drug, which has just been approved in the United States, as well as a heartburn drug.

Takeda has to survive as a global player. It's not in a position to go backwards, said Credit Suisse analyst Fumiyoshi Sakai.

Nycomed would be a second major deal for Takeda after it bought U.S. cancer drug specialist Millennium Pharmaceuticals in 2008 for about $9 billion.

This is Takeda's big play. It's done Millennium and now Nycomed -- it's not going to be doing another acquisition of this size again, said Sakai.

Japanese drugmakers, including Daiichi Sankyo and Astellas Pharma, have been actively pursuing acquisitions to boost growth as they face the loss of patent protection on key medicines.

One person familiar with the matter said Takeda's deal with Nycomed is in its final stages although it may take some more time to conclude.

The sources did not want to be identified as they were not authorized to speak to the media. Takeda and Nycomed both declined to comment.

Takeda, which has around 874 billion yen ($10.8 billion) in cash and marketable securities at hand, has previously said it would be willing to take on debt for future deals.

The second source told Reuters that Takeda has approached a number of major domestic lenders who were prepared to help with financing of the deal which is likely to exceed 1 trillion yen.

A $12 billion purchase would be the second-biggest takeover by a Japanese firm after Japan Tobacco's $19 billion buy of British rival Gallagher, according to Thomson Reuters data.

Nycomed had revenue of 3.2 billion euros in 2010 and generated earnings of 774.9 million euros before interest, taxes, depreciation and amortization. Emerging markets accounted for 39 percent of its revenue, with sales in Latin America up 29.8 percent and sales in Russia up 23.3 percent.

Takeda has hired Deutsche Securities as an advisor, the sources said. Takeda's shares ended 1.4 percent lower, in line with the Nikkei benchmark index.


Nycomed is majority owned by four private equity firms, led by Nordic Capital with a 41 percent. The other three are Credit Suisse's DLJ Merchant Banking which owns 25.6 percent, Coller International Partners with 9.7 percent and Avista with 8.9 percent.

Nycomed's top product is pantoprazole for heartburn, a field that Takeda knows well with its own Prevacid, a former blockbuster heartburn drug that has now lost patent protection.

The mid-sized pharmaceutical firm with 12,500 employees also now boasts lung drug roflumilast, known as Daxas in Europe and as Daliresp in the United States. It is the first drug in a new class of treatment for chronic obstructive pulmonary disease, a common and deadly disorder which causes breathing difficulties and is often caused by cigarette smoking.

It won U.S. approval in March, following earlier delays, where Forest Laboratories has the marketing rights. In Europe, Merck & Co has the marketing rights.

Nycomed has been the subject of much speculation about a sale or an IPO, with the Wall Street Journal reporting in 2009 that the drugmaker had hired Goldman Sachs to explore a possible sale of the company, a deal that was said at the time to be worth as much as 10 billion euros.

Chief Executive Hakan Bjorklund told Reuters earlier this year that an IPO this year was highly unlikely.

Takeda said on Wednesday that it expects operating profit to increase 6.2 percent to 390 billion yen in the year to March 2012, helped in part by sales of its top selling diabetes drug Actos.

But it expects operating profit to fall to 240 billion yen two years later, hurt by the expiry of its patent on Actos. Chief Executive Yasuchika Hasegawa said, however, he expects that to be the bottom.

We will continue to pursue the acquisition of rights to drugs in late-stage development and the acquisition of companies. From experience, I expect we will be able to return to the earnings levels seen in the last business year by the year ending March 2016, he told a news conference.

Last year, Nycomed bought a majority stake in a Chinese pharmaceutical company, underscoring its focus on emerging markets and Western manufacturers' hunger to boost their presence in the country.

It paid around $210 million for the 51.3 percent stake in Guangdong Techpool Bio-Pharma. ($1 = 81.065 Japanese Yen) (Writing by Edwina Gibbs; Additional reporting by Ritsuko Shimizu, Antoni Slodkowski, James Topham and Junko Fujita in TOKYO, Katie Reid in ZURICH and Renju Jose in BANGALORE; Editing by Anshuman Daga)