Astellas Acquisitions Strategy to Prioritise Innovation over Scale

Speaking to Nikkei, the co-chairman of Japanese pharmaceutical firm Astellas, Hatsuo Aoki, has pledged that his firm will pursue an acquisitions strategy aiming specifically "to obtain technology required to compete globally". The remarks signal a change of emphasis as the firm settles down from the post-merger restructuring of recent years. In effect, the company is arriving at the view that with sales nearing the trillion-yen mark, it is large enough to compete globally, but growth must now be underpinned by buying into breakthrough technologies.

Astellas has performed well in FY 2007/08, led by mainstays such as hypertension product Micardis (telmisartan) and the immunosuppressant Prograf (tacrolimus). Newer products such as overactive bladder drug Vesicare (solifenacin) and novel antibiotic Geninax (garenoxacin) have sold strongly (see Japan: 11 December 2007: Geninax Makes Strong Debut in Japan). Accordingly, the company believes it is still on course to meet its forecasts of a 5.1% increase in global sales and a 34% increase in operating income for the period.

Astellas Changes Gear

However, Hatsuo concedes that there are a number of strategic challenges, in particular what he obliquely describes as "the 2010 problem"—the year when blockbusters such as Pfizer's (U.S.) Lipitor (atorvastatin), which Astellas markets in Japan, will go off patent. The need to replace lost revenues is urgent, given that there have been a few problems with the near-term pipeline, at least in the United States. In 2007, the firm garnered approvable letters from the U.S. FDA for Prograf (tacrolimus), where approval for a modified-release version and a slew of new indications was being sought. The FDA is expected to reach a decision on Prograf MR in liver transplant rejection this month, with a move on kidney transplant rejection slated for March 2008. Meanwhile, the novel antibiotic telavancin has also suffered a number of setbacks (see table), and near-term approval hopes centre on atrial fibrillation drug vernakalant (see Japan: 10 December 2007: Astellas, Cardiome's Vernakalant Recommended by FDA Reviewer). On a more positive note, the molecule that is seen as Astellas's most exciting in-house candidate, thromboembolism drug YM150, is set to enter Phase III trials later this year. Assuming it is successfully launched, some observers expect the drug to bring revenues in excess of ¥100 billion (US$920 million). Even so, Astellas is not alone in testing promising new compounds in this niche; rival innovator firms such as Bayer (Germany), Bristol-Myers Squibb (BMS; U.S.), and Eli Lilly (U.S.) are working on Factor Xa inhibitors (see Germany: 9 July 2007: BMS, Pfizer Tout Apixaban Findings).

The question remains, then, whether this will be enough to compensate for stiffening generic competition and withering pipelines in the years that lie ahead. These concerns explain why Astellas acquired a U.S. developer of therapeutic antibodies, Agensys, in late 2007 (see United States - Japan: 27 November 2007: Astellas Announces US$387-mil. Agensys Acquisition). That deal heralded Astellas's determination to enter the monoclonal antibodies (MAbs) space in strength. Agensys claims to have 12 MAbs in its pipeline, and the U.S. firm's absorption will help support Astellas's somewhat threadbare oncology pipeline, which is currently led by prostate cancer drug YM155.

Outlook and Implications

Getting into leading-edge biotech is now a priority not just for Astellas but for other Japanese firms. For example, the recent merger of Kyowa Hakko and Kirin had one eye on antibodies research, and Eisai has also acquired new assets in the United States that have promising research programmes in oncology (see United States: 10 December 2007: Eisai to Acquire MGI Pharma for US$3.9 bil.). In further good news for Japanese pharma, reforms to the tax treatment on research offer a one-off incentive to scout new acquisition targets in R&D (see Japan: 8 January 2007: Japanese Pharma Eyes Gains from R&D Incentives, OTC Reforms).