IHS Global Insight Perspective | |
Significance | Astellas remained enthusiastic about its takeover plan of CV Therapeutics at a total price of some US$1 billion, although the latter has declined the bid. |
Implications | It could be good timing for the Japanese company to buy its U.S. partner, with stronger Japanese currency. Meanwhile, with a keen eye on CV's cardiac drugs especially Ranexa, Astellas is trying to expand and speed up the pipeline development in the face of generic competition after its main products come off patent. |
Outlook | There is still a good chance for Astellas to achieve the plan but the bid offer may have to be raised. Meanwhile, more high-profile M&As are expected to come in the short and medium term. |
Japan's second-largest pharmaceutical company Astellas has announced its unsolicited bid to acquire U.S. biotech CV Therapeutics with an all-cash payment of about US$1 billon. After being rejected by CV Therapeutics, Astellas claimed it remains enthusiastic about the takeover.
Astellas proposed the acquisition to CV Therapeutics on 14 November 2008 offering US$16 per share. One week later, CV Therapeutics declined the offer claiming that "it is not in the best interests of CV Therapeutics and its stockholders".
Partners Turned Merger Parties
Astellas and CV Therapeutics were no strangers before Astellas launched its hostile acquisition bid. The two companies' partnership can be dated back to CV Therapeutics' collaboration in the development of its Lexiscan (reganedoson) with Japanese drug firm Fujisawa, which later formed Astellas in merger with another Japanese company Yamanouchi in 2005. In June 2008, the two partners launched Lexiscan (reganedoson), an A2A adenosine receptor agonist indicated for use as a pharmacologic stress agent in radionuclide myocardial perfusion imaging (MPI) in patients unable to undergo adequate exercise stress in the United States (see United States - Japan: 25 June 2008: Astellas Announces Lexiscan Launch in U.S.). According to the Financial Times, Astellas was also in talks with the U.S. drug maker for the collaboration of the latter's cardiovascular drug Ranexa (ranolazine) but the talks didn't turn out to be fruitful before the Japanese firm's takeover bid launch.
Timing of Astellas's Takeover Bid
Astellas, as many other drug heavyweights worldwide, is facing the increasing threat of generics competition following patent expiries of its top-selling drugs such as immunosuppressant Prograf (tacrolimus), which expired in April 2008 in the United States. Expanding and accelerating the product pipeline are among the main strategies, for which mergers and acquisitions can be a shortcut. CV Therapeutics, with its promising cardiac drugs like Lexiscan and Ranexa, will undoubtedly serve this purpose well for Astellas's future growth. Among the Japanese pharma majors, Astellas is not the first one to take such an action to fend off the looming impact of their off-patent drugs. Last May, Japanese drug heavyweight Takeda acquired U.S. biotech Millennium (see Japan: 15 May 2008: Takeda Completes Millennium Acquisition). In September of the same year, Japanese pharma Shionogi acquired U.S. company Sciele (see United States - Japan: 1 September 2008: Shionogi to Acquire Sciele Pharma for US$1.1 bil.).
The global recession, on the other hand, has presented Japanese companies including Astellas a good opportunity to launch their takeover across the Pacific as the Japanese yen grows stronger against the U.S. dollar to make the purchase relatively cheap. Meanwhile, buying CV Therapeutics could be a strategic step for Astellas to sustain its growth under the current economic circumstances.
Outlook and Implications
Astellas has shown its aggression to push ahead the acquisition although its U.S. target has been declining to engage in relevant talks. Keen on combining CV Therapeutics' products into its own portfolio through the takeover, Astellas may raise its bid to get the proposal approved in order to expand its portfolio with the U.S. company's pipeline products.
On the side of CV Therapeutics, Astellas's international drug development and marketing platform can bring it into a new stage of development in addition to the US$1-billion cash injection. There is still a good chance for Astellas's offer to gain the favour of CV's shareholders before the Japanese major moves on to other prey.
Either way, the new wave of high-profile mergers and acquisitions, highlighted by Pfizer's (U.S.) fresh mega-merger of compatriot drug giant Wyeth (see United States: 27 January 2009: Pfizer Acquires Wyeth in the Industry's Largest-Ever Takeover Deal), won't stop here. IHS Global Insight expects to see more similar deals among pharmaceutical companies as well as pharmaceutical and biotech companies in the pipeline in the coming years.