Astellas Pharma has agreed to buy US biotech group Iveric Bio for roughly $5.9bn, marking the Japanese drugmaker’s largest-ever acquisition and giving it access to the rapidly expanding market for age-related eye diseases.
Astellas’s new chief executive Naoki Okamura said in an interview with the Financial Times that he was “not yet satisfied” and open to additional acquisitions to strengthen the group’s growth prospects.
Astellas said on Monday that it would use cash and loans to buy the New Jersey-based company, formerly known as Ophthotech, for $40 a share, representing a premium of 22 per cent to the US company’s closing price on Friday.
The deal marks the latest acquisition by Japanese companies — including beer maker Kirin and IT specialist Fujitsu — seeking growth outside their shrinking home market, even as a weaker yen makes takeovers more expensive.
Astellas, Japan’s second-largest pharmaceutical company by revenue, has spent more than ¥1tn ($7.3bn) in overseas acquisitions and partnerships since 2007, including its $3bn purchase of US drugmaker Audentes Therapeutics in 2020 and its $3.8bn takeover of US-based oncology specialist OSI Pharmaceuticals in 2010.
The latest acquisition will add Iveric’s ACP to Astellas’s portfolio. ACP is a treatment undergoing trials for geographic atrophy, an eye disease that affects 1.6mn patients in the US.
Okamura said Astellas, which also has its own treatment to treat eye diseases, had been interested in ACP for a long time. The company seized the opportunity when Okamura was told that Iveric was up for sale in March.
“It was a once-in-a-lifetime opportunity for us,” Okamura said, adding that he wanted to grow ACP into “a third pillar” of the business, alongside menopause drug candidate fezolinetant and bladder cancer treatment padcev.
The 60-year-old took the helm of Astellas in April after overseeing the company’s merger and acquisition strategy for years.
His appointment comes at a challenging time for Astellas, which is searching for new blockbuster medicines with sales of $1bn and more a year.
It is under pressure because its US patent for Xtandi, a popular prostate cancer drug whose sales are shared with Pfizer, is expiring in 2027. For the current fiscal year until March 2024, Astellas expects sales of ¥670bn from Xtandi but analysts say sales have been slowing faster than expected in the US.
The company’s development of new drugs has not advanced as quickly as it forecast. By expanding the revenue of its key drugs, the company had aimed to reach a market capitalisation of ¥7tn by fiscal 2025, but its current value is only at ¥3.8tn.
Shinya Tsuzuki, an analyst at Mizuho, said the Iveric acquisition appeared to diverge from the company’s usual strategy of buying early-stage products, but he added that the acquisition of ACP would reassure investors worried about patents expiring.
“It’s hard to judge whether $5.9bn is expensive or not, but we have a positive impression that the company got hold of a best-in-class product,” said Tsuzuki.
Shares in Astellas closed 2.2 per cent higher following the deal’s announcement.
Okamura said the latest acquisition will increase the chances of achieving its longer-term financial targets, but he did not rule out further deals.
“Our radar is always screening for opportunities,” Okamura said, adding that the US-China geopolitical tensions and the weaker yen would not have a major impact on the company’s M&A strategy.
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