IHS Global Insight Perspective | |
Significance | Dainippon Sumitomo launched its international expansion with the offer to acquire Sepracor for US$2.6 billion. |
Implications | In addition to a solid infrastructure of sales and marketing in the U.S. and Canadian markets, Sepracor is also to bring DSP a sizeable product portfolio and development pipeline with focus in CNS and respiratory fields. |
Outlook | DSP's acquisition of Sepracor will establish a solid platform for the marketing of pipeline hopeful lurasidone. In addition, the company's overseas revenue is also likely to benefit from Sepracor's portfolio. |
Japanese drug company Dainippon Sumitomo Pharma (DSP) today announced that it has launched a tender offer to acquire U.S. specialty pharma firm Sepracor with a US$2.6-million price tag. The Japanese company noted that upon the successful completion of the acquisition, which was already approved unanimously by the boards of both companies, Sepracor will become a wholly-owned subsidiary of DSP.
Further financial details in terms of goodwill and in-process R&D expenses will be revealed once determined. In addition, the acquisition is subject to "expiration or termination of any waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and satisfaction or waiver of other customary conditions", adds DSP in its announcement.
Sepracor Acquisition Set to Expand DSP CNS Pipeline
DSP is aiming to establish a solid platform for sales and marketing in the U.S. market through the acquisition of Sepracor. Moreover, specialising in therapeutic areas such as CNS and respiratory disease treatment, Sepracor holds the potential to enrich DSP's product portfolio and pipeline in the two fields. In 2008, Sepracor garnered sales revenue of US$1.3 billion and net profit stood at US$480 million. DSP noted that the company expects its overseas revenue to be boosted by 40% by this acquisition.
Sepracor: Main Products and Pipeline Candidates | ||
Marketed Products | ||
Drug Name | Indication | |
Lunesta | Insomnia | |
Xopenex | Asthma/COPD | |
Brovana | COPD | |
Omnaris | Allergic Rhinitis | |
Alvesco | Asthma | |
Out-Licensed Products | ||
Drug Name | Indication | Licensee |
Allegra | Anti-allergy | Sanofi-Aventis (France) |
Xyzal | Anti-allergy | UCB (Belgium) |
Clarinex | Anti-allergy | Schering-Plough (U.S.) |
Pipeline Products | ||
Drug Name | Indication | Stage |
Stedesa | Epilepsy | NDA filed to FDA |
SEP-225289 | Depression | Phase II |
Source: Sepracor | ||
Outlook and Implications
The acquisition of Sepracor was announced within one week of DSP's report on positive Phase III results for its main pipeline product, schizophrenia treatment lurasidone, which is set to file for regulatory approval in the U.S. market in the first half of 2010 (see Japan: 27 August 2009: Dainippon Sumitomo's Lurasidone Shows Encouraging Results in Late-Stage Trials). The timing reflects that the Sepracor acquisition is clearly a step of DSP to maximise the marketing and sales of lurasidone in the United States with an enhanced infrastructure with the synergy of Sepracor's existing platform.
However, DSP may feel the strain to foot the US$2.6-billion bill considering the company's existing financial position. Earlier this year, DSP announced the halt of the overseas development for its other major pipeline candidate, schizophrenia treatment Lonasen (blonanserin) due to concerns over rising R&D expenses. The goodwill and R&D expenses related to this acquisition will add further pressure to DSP's bottom-line performance in the ensuing financial years if the deal is completed as expected.
On the other hand, DSP's acquisition bid for Sepracor is also the latest highlight of Japanese research-based drug makers' moves of international expansion with a special focus on M&A activities in the U.S. market. Prior to DSP's Sepracor acquisition bid, similar high-profile actions taken by compatriot pharma companies include Takeda's acquisition of U.S. oncology-focused company Millennium, Eisai's acquisition of U.S. oncology specialty firm MGI Pharma and Shionogi's acquisition of Sciele Pharma (U.S.). In addition, Japan's second-largest drug maker Daiichi Sankyo set its acquisition in a different direction by acquiring Indian generic giant Ranbaxy. There were also unsuccessful bids as Astellas' hostile offer of acquiring U.S. firm CV Therapeutics failed earlier this year. Nevertheless, facing an increasingly challenging business environment in the domestic market, where generic competition is becoming more threatening, as well as the growing need for pipeline expansion, Japanese drug makers' overseas expansion is likely to intensify in the forthcoming years.