Winnipeg Free Press - PRINT EDITION

Cangene takeover might not be a bad thing

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One of the facts of life in the global economy is commercial ownership of assets is going to be bought and sold throughout that global marketplace.

Winnipeggers might be a little more sensitive than other cities, whose head-office rosters are a little deeper than ours.

But it's never a very elegant argument to complain about a foreign ownership takeover of a Manitoba company when that Manitoba company has relied on foreign sales to build its local enterprise and support its local employment.

The recently announced proposed sale of Cangene Corp. to Emergent BioSolutions Inc. of Maryland for $222 million is bringing up those concerns once again.

Plans have not been disclosed about what will happen with Cangene's Winnipeg operations, other than a general statement from Emergent executives it has every intention of continuing to operate Cangene's local assets.

There is no denying local ownership of an enterprise ties it much closer to the community in just about every way.

But in the case of Cangene, it never really had local ownership to begin with, and for about two years now it hasn't even had senior management domiciled here.

Although its shares are publicly traded, much more than 60 per cent of them have always been held by the Toronto pharmaceutical company Apotex.

Approval of two-thirds of Cangene's shareholders are required for the deal to proceed, and the Apotex block has already made clear its approval of the deal.

About two years ago, Cangene's longtime CEO John Langstaff resigned and he was succeeded by a U.S. biotech executive named John Sedor, who was, and continues to be, based in Philadelphia.

Over time, more of the senior management has been moved to the Philadelphia offices so now Cangene's sales and marketing, which used to be based here, happens out of its U.S. offices. As well, the Winnipeg workforce has been significantly pared back from about 500 at its peak to about 300.

Every business has its ebb and flow of relative robustness and prosperity, and Cangene has seen better days. But regardless of where it is in the economic cycle, Cangene has always provided a significant underpinning to the city's nascent biotech sector.

Cangene is by far the largest and most profitable and successful player in the field, so its future fortunes will impact the broader sector, which, not counting the public and academic research institutions, is largely made up of small firms doing novel research in the development of new medical treatments.

Barry Labinger, Emergent's executive vice-president and president of its biosciences division, said Emergent has grown through acquisitions and its workforce of 850 people is spread out at the facilities of the companies it has acquired.

When the Cangene acquisition closes, it will automatically become Emergent's second-largest centre, its largest being in Lansing, Mich., not its suburban Baltimore headquarters.

"When we have done acquisitions, we have acquired not just the product assets but we have brought in the capabilities and talent of the people and for the most part kept them on board and kept them working where they are," Labinger said. "That is how our company has been put together over the years."

Cangene officials were not available for comment, but there are some in the local industry who acknowledge Emergent is likely a good fit for Cangene.

Tracey Maconachie, president of the Life Sciences Association of Manitoba, said, "There is a sense from the people I have spoken to that this is a good thing. No one really knows what will happen from an employment perspective, but from a company perspective this is being viewed as positive."

But there are definitely concerns out there. A veteran Winnipeg business-development expert said the predominant dynamic in the local tech sector is that financial relief is most likely going to be found via a purchaser, which often will mean a relocation.

But Cangene was debt free and already well-established, and Emergent has a track record of leaving its acquisitions in place.

But some Winnipeggers who've seen it happen before point out no matter how complicated the production is, it can always be relocated.

Republished from the Winnipeg Free Press print edition December 20, 2013 B6

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About Martin Cash

Martin Cash joined the Free Press in 1987 as the paper’s business columnist.

He has spent two decades chronicling the city’s business affairs.

Martin won a citation of merit from the National Newspaper Awards in 2001 for his coverage of the strike and subsequent multi-million-dollar union settlement at the Versatile tractor plant. He has also received honours and awards for his work on agriculture and technology development in Manitoba.

Martin has written a coffee-table book about the commercial and industrial make-up of the city, called Winnipeg: A Prairie Portrait.

Martin Cash on Twitter: @martycash


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