Takeda Pharmaceutical Co is to expand its footprint in the US oncology market with the US$4.66 billion purchase of Ariad Pharmaceuticals Inc, adding one potential blockbuster in lung cancer and another already on-the-market therapy.
Takeda is to pay US$24 per share for Ariad, the companies said in a statement on Monday, 75 percent more than its Friday close of US$13.74. The deal would give it Ariad’s drug brigatinib, an experimental therapy being tested in lung cancer, and Iclusig, which is estimated to have brought in US$170.5 million last year.
The announcement came at the start of the JP Morgan Healthcare Conference in San Francisco, the year’s biggest gathering of healthcare investors and companies.
Takeda, based in Osaka, has been on a hunt for new drugs to replenish a flagging pipeline after patents have expired on some of its biggest products. As international drugmakers have spent billions on acquisitions in the last two years, Japanese drugmakers stayed largely on the sidelines.
However, they are now facing increased pressures at home, as the government attempts to lower the prices of many branded medicines and put a greater focus on generics to manage its healthcare spending.
In an interview, Takeda chief executive officer Christophe Weber said that “potentially” more deals could follow, although the company will remain disciplined.
Ariad has submitted brigatinib to regulators at the US Food and Drug Administration for review, with an expected decision by April 29. Meant to treat a form of non-small cell cancer, the therapy could have annual peak sales of more than US$1 billion, the company said.
The Cambridge, Massachusetts-based company’s drug Iclusig treats a rare advanced form of the blood cancer leukemia and has been the subject of controversy for its pricing of the pill. In October last year, US Senator Bernie Sanders decried the company’s “greed” in setting the list price of the drug at almost US$200,000 per year.
“Whether the premium of over 70 percent for the acquisition is justified depends on synergies ahead,” Morgan Stanley MUFG Securities Co analysts wrote in a research note about the Ariad acquisition, pointing to strong competition from other top drugs in the cancer space.
Takeda said in the statement that the deal is expected to add to its earnings by its fiscal year ending March 2019.
Takeda has been looking abroad as domestic growth slows and turned its focus on three therapeutic areas — gastroenterology, oncology and the central nervous system.
The Ariad deal is complementary to Takeda’s strategy on oncology, which is part of its core with gastroenterology and the central nervous system, Weber said in the interview, adding that there are no plans to expand into other therapy areas for now.
In January last year, Ariad elevated a new chief executive officer, Paris Panayiotopoulos, amid pressure from activist investor Alex Denner.
The drugmaker then slashed 19 percent of the company’s workforce and undertook what it called a “strategic review.”
“We will look at all situations but we are very responsible about all prices,” Weber said about drug pricing.