TOKYO—Days before an earthquake and tsunami devastated much of Japan on March 11, two Japanese pharma giants—Kyowa Hakko Kirin Co. Ltd. and Daiichi Sankyo Co. Ltd.—announced foreign acquisitions totaling $1.4 billion, possibly signaling a trend toward the Japanese drug industry's expansion into foreign markets.
According to many market analysts, an 8.5 percent boost in the yen in the last year has prompted many Japanese companies to take a closer look at the strong drug discovery pipelines of some U.S. and European companies and consider bringing them into their folds. While it's unclear how Japan's current challenges will impact this trend, market watchers are still captivated by these recent high-value acquisitions.
On Feb. 21, Kyowa Hakko announced an agreement to buy Scottish specialty drug firm ProStrakan Group PLC for $474.6 million in cash, or 130 pence per share, for a 41 percent premium to Prostrakan's share price on Nov. 12, the last business day before the start of ProStrakan's current offer period. Based in Galashiels, Scotland, ProStrakan markets a range of specialist products through commercial operations in the United Kingdom, Germany, France, Italy, Spain and Sweden. ProStrakan also has an established commercial infrastructure in North America via a strategic alliance with NovaQuest.
A week later on Feb. 28, Daiichi Sankyo announced its acquisition of Plexxikon Inc., a privately held pharmaceutical company based in Berkeley, Calif., for $805 million. Attracted by Plexxikon's late-stage oncology product, PLX4032, Daiichi Sankyo may pay Plexxikon an additional $130 million based on near-term launch milestones with respect to PLX4032 in malignant melanoma.
According to a recent Bloomberg report, these high-figure deals are indicative of the current demand for new products by Japanese drugmakers. The past year has seen a 30 percent increase in the number of overseas deals by Japanese pharmaceutical and biotechnology firms, Bloomberg notes. Koji Hirai, chief executive of Kachitas Corp., which advises companies on such deals, recently told the news organization that overseas mergers and acquisitions "will definitely accelerate in the pharmaceutical industry in Japan."
"They're all cash-rich looking for potential medicines and technologies for future growth. The stronger yen will definitely help," Hirai told Bloomberg.
For now, while Japan works on rebuilding those areas that were leveled by the recent earthquake and tsunami—and works to fend off resulting nuclear accidents—analysts are focusing on what these recent deals mean for the companies involved.
From its purchase of ProStrakan, Kyowa Hakko gains a direct sales and marketing presence in the United States and Europe as well as access to a range of country-specific specialty products, including Sancuso, a transdermal patch containing granisetron to prevent chemotherapy-induced nausea and vomiting that was launched in the United States in 2008 and is currently undergoing the EU approval process; Tostran/Fortesta, a testosterone gel licensed in both the United States and Europe; Abstral, an oral tablet for cancer pain management that is marketed in the United States and Europe; and Rectogesic, a rectal ointment for relief of pain associated with chronic anal fissure that is marketed in Europe.
With more than 300 employees worldwide, ProStrakan also has a pipeline of several late-stage candidates for the treatment of cancer pain, post-operative nausea and vomiting, anal fissure pain and male hypogonadism.
"Kyowa Hakko owns and develops a large and attractive portfolio of pipeline products in various therapeutic areas of unmet medical needs, such as oncology. Kyowa Hakko has a number of late-stage pipeline products which it could market through ProStrakan's sales and marketing presence in the United States and Europe," Callum Spreng, a spokesman for ProStrakan, tells ddn.
ProStrakan reportedly rebuffed several acquisition offers before accepting Kyowa Hakko's bid, despite recently suffering setbacks from U.S. manufacturing problems for Sancuso and U.S. restrictions on the approval of Abstral.
"There was a manufacturing interruption in the United States for Sancuso announced in Q3 2010 caused by Sancuso's manufacturer closing its Florida operation temporarily. Sancuso has now been relaunched," explains Spreng.
For Daiichi Sankyo, the acquisition of Plexxikon "not only accelerates our entry into the oncology market, but strengthens our pipeline and will enable us to achieve our mid- and long-term business objectives of providing world-class, innovative pharmaceuticals in core areas of unmet medical need," said Daiichi Sankyo CEO Joji Nakayama in a statement announcing the deal. "We look forward to working with the esteemed scientists and management team at Plexxikon, who are leaders in the discovery and development of novel small-molecule pharmaceuticals to treat human disease."
PLX4032 is "an elegant example of a targeted therapeutic designed to be administered to patients likely to respond to treatment on the basis of a companion diagnostic test that can detect the presence of a specific genetic mutation," Daiichi Sankyo says. Jointly developed by Plexxikon and Roche, the product has demonstrated in a Phase III trial that it meets co-primary endpoints of overall survival and progression-free survival among patients with previously untreated metastatic melanoma expressing the BRAF mutation. Under the terms of the acquisition agreement, Daiichi Sankyo obtains certain co-promotion rights in the United States for PLX4032.
Plexxikon is also conducting Phase I studies of promising kinase inhibitors for rheumatoid arthritis and metastatic cancer and has several early-stage programs in development for polycystic kidney disease, hypertension, Alzheimer's disease, multiple sclerosis, lupus, type 2 diabetes and obesity.
Founded in 2001, Plexxikon has 43 employees at its Bay Area headquarters, and the company has worked out an interesting arrangement regarding those employees' future with Daiichi Sankyo.
"All employees are being incentivized to stay," says Kathleen Glaub, president of Plexxikon. "Daiichi Sankyo has provided for Plexxikon a budget that is very comparable for what we projected for this year and next year. We will be able to independently manage that budget, decide which projects go forward and what studies we do. Since they have no competing research interests in the United States, they don't want to get in the way of that."
This arrangement, says Glaub, evolved out of initial discussions about the possibility of Daiichi Sankyo licensing some of Plexxikon's programs.
"But at some point, they decided they liked the whole package," she says. "When discussions turned to acquisition, we proposed this two-year experiment because they wanted us to operate like a standalone entity."
Japanese firms are 'safe and accounted for' following disaster
TOKYO—In our communication with Japanese firms Kyowa Hakko Kirin Co. Ltd. and Daiichi Sankyo Co. Ltd. this month—a challenge, to say the least, following the earthquake and tsunami that devastated much of their homeland this month—both companies are quick to assure us that they were largely unaffected by this natural disaster, and that recent events will have no impact on their recently announced acquisition plans.
Although companies around the globe that have operations in Japan are still trying to account for all of their employees, preliminary media reports suggest that most facilities have not suffered major damage.
"We have confirmed that all of our colleagues are safe, and our operations are no problem," says Hidenori Ishii, a spokesman for Kyowa Hakko.
Daiichi Sankyo reports that several of its employees suffered minor injuries, but are also "safe and accounted for." The firm's production plants in Onahama and Hiratsuka were partly damaged, and other facilities have been affected by power outages, the company adds.
Daiichi Sankyo is also donating $1.2 million dollars to the Japanese Red Cross and implementing a "Matching Gifts" program for employee donations to assist victims. The company is also considering donating medical supplies to the relief effort.
"The Daiichi Sankyo Group offers its deepest sympathies to those affected by this disaster and sincerely hopes that, with the support of private and public organizations in Japan and all over the world, the regions affected by this catastrophe will be able to begin their rebuilding and healing processes as soon as possible," the company said in a formal statement.
Japanese compatriot Takeda Pharmaceutical Co. has also contributed $3.6 million to the Red Cross, and is planning "the donation of pharmaceutical products and all other supports that are feasible for the company." Global pharmaceutical company Eisai Co. Ltd. has also offered $244,000 to the Tohoku Pacific Earthquake Relief Fund, and several American firms are stepping up to contribute relief efforts.
According to many market analysts, an 8.5 percent boost in the yen in the last year has prompted many Japanese companies to take a closer look at the strong drug discovery pipelines of some U.S. and European companies and consider bringing them into their folds. While it's unclear how Japan's current challenges will impact this trend, market watchers are still captivated by these recent high-value acquisitions.
On Feb. 21, Kyowa Hakko announced an agreement to buy Scottish specialty drug firm ProStrakan Group PLC for $474.6 million in cash, or 130 pence per share, for a 41 percent premium to Prostrakan's share price on Nov. 12, the last business day before the start of ProStrakan's current offer period. Based in Galashiels, Scotland, ProStrakan markets a range of specialist products through commercial operations in the United Kingdom, Germany, France, Italy, Spain and Sweden. ProStrakan also has an established commercial infrastructure in North America via a strategic alliance with NovaQuest.
A week later on Feb. 28, Daiichi Sankyo announced its acquisition of Plexxikon Inc., a privately held pharmaceutical company based in Berkeley, Calif., for $805 million. Attracted by Plexxikon's late-stage oncology product, PLX4032, Daiichi Sankyo may pay Plexxikon an additional $130 million based on near-term launch milestones with respect to PLX4032 in malignant melanoma.
According to a recent Bloomberg report, these high-figure deals are indicative of the current demand for new products by Japanese drugmakers. The past year has seen a 30 percent increase in the number of overseas deals by Japanese pharmaceutical and biotechnology firms, Bloomberg notes. Koji Hirai, chief executive of Kachitas Corp., which advises companies on such deals, recently told the news organization that overseas mergers and acquisitions "will definitely accelerate in the pharmaceutical industry in Japan."
"They're all cash-rich looking for potential medicines and technologies for future growth. The stronger yen will definitely help," Hirai told Bloomberg.
For now, while Japan works on rebuilding those areas that were leveled by the recent earthquake and tsunami—and works to fend off resulting nuclear accidents—analysts are focusing on what these recent deals mean for the companies involved.
From its purchase of ProStrakan, Kyowa Hakko gains a direct sales and marketing presence in the United States and Europe as well as access to a range of country-specific specialty products, including Sancuso, a transdermal patch containing granisetron to prevent chemotherapy-induced nausea and vomiting that was launched in the United States in 2008 and is currently undergoing the EU approval process; Tostran/Fortesta, a testosterone gel licensed in both the United States and Europe; Abstral, an oral tablet for cancer pain management that is marketed in the United States and Europe; and Rectogesic, a rectal ointment for relief of pain associated with chronic anal fissure that is marketed in Europe.
With more than 300 employees worldwide, ProStrakan also has a pipeline of several late-stage candidates for the treatment of cancer pain, post-operative nausea and vomiting, anal fissure pain and male hypogonadism.
"Kyowa Hakko owns and develops a large and attractive portfolio of pipeline products in various therapeutic areas of unmet medical needs, such as oncology. Kyowa Hakko has a number of late-stage pipeline products which it could market through ProStrakan's sales and marketing presence in the United States and Europe," Callum Spreng, a spokesman for ProStrakan, tells ddn.
ProStrakan reportedly rebuffed several acquisition offers before accepting Kyowa Hakko's bid, despite recently suffering setbacks from U.S. manufacturing problems for Sancuso and U.S. restrictions on the approval of Abstral.
"There was a manufacturing interruption in the United States for Sancuso announced in Q3 2010 caused by Sancuso's manufacturer closing its Florida operation temporarily. Sancuso has now been relaunched," explains Spreng.
For Daiichi Sankyo, the acquisition of Plexxikon "not only accelerates our entry into the oncology market, but strengthens our pipeline and will enable us to achieve our mid- and long-term business objectives of providing world-class, innovative pharmaceuticals in core areas of unmet medical need," said Daiichi Sankyo CEO Joji Nakayama in a statement announcing the deal. "We look forward to working with the esteemed scientists and management team at Plexxikon, who are leaders in the discovery and development of novel small-molecule pharmaceuticals to treat human disease."
PLX4032 is "an elegant example of a targeted therapeutic designed to be administered to patients likely to respond to treatment on the basis of a companion diagnostic test that can detect the presence of a specific genetic mutation," Daiichi Sankyo says. Jointly developed by Plexxikon and Roche, the product has demonstrated in a Phase III trial that it meets co-primary endpoints of overall survival and progression-free survival among patients with previously untreated metastatic melanoma expressing the BRAF mutation. Under the terms of the acquisition agreement, Daiichi Sankyo obtains certain co-promotion rights in the United States for PLX4032.
Plexxikon is also conducting Phase I studies of promising kinase inhibitors for rheumatoid arthritis and metastatic cancer and has several early-stage programs in development for polycystic kidney disease, hypertension, Alzheimer's disease, multiple sclerosis, lupus, type 2 diabetes and obesity.
Founded in 2001, Plexxikon has 43 employees at its Bay Area headquarters, and the company has worked out an interesting arrangement regarding those employees' future with Daiichi Sankyo.
"All employees are being incentivized to stay," says Kathleen Glaub, president of Plexxikon. "Daiichi Sankyo has provided for Plexxikon a budget that is very comparable for what we projected for this year and next year. We will be able to independently manage that budget, decide which projects go forward and what studies we do. Since they have no competing research interests in the United States, they don't want to get in the way of that."
This arrangement, says Glaub, evolved out of initial discussions about the possibility of Daiichi Sankyo licensing some of Plexxikon's programs.
"But at some point, they decided they liked the whole package," she says. "When discussions turned to acquisition, we proposed this two-year experiment because they wanted us to operate like a standalone entity."
Japanese firms are 'safe and accounted for' following disaster
TOKYO—In our communication with Japanese firms Kyowa Hakko Kirin Co. Ltd. and Daiichi Sankyo Co. Ltd. this month—a challenge, to say the least, following the earthquake and tsunami that devastated much of their homeland this month—both companies are quick to assure us that they were largely unaffected by this natural disaster, and that recent events will have no impact on their recently announced acquisition plans.
Although companies around the globe that have operations in Japan are still trying to account for all of their employees, preliminary media reports suggest that most facilities have not suffered major damage.
"We have confirmed that all of our colleagues are safe, and our operations are no problem," says Hidenori Ishii, a spokesman for Kyowa Hakko.
Daiichi Sankyo reports that several of its employees suffered minor injuries, but are also "safe and accounted for." The firm's production plants in Onahama and Hiratsuka were partly damaged, and other facilities have been affected by power outages, the company adds.
Daiichi Sankyo is also donating $1.2 million dollars to the Japanese Red Cross and implementing a "Matching Gifts" program for employee donations to assist victims. The company is also considering donating medical supplies to the relief effort.
"The Daiichi Sankyo Group offers its deepest sympathies to those affected by this disaster and sincerely hopes that, with the support of private and public organizations in Japan and all over the world, the regions affected by this catastrophe will be able to begin their rebuilding and healing processes as soon as possible," the company said in a formal statement.
Japanese compatriot Takeda Pharmaceutical Co. has also contributed $3.6 million to the Red Cross, and is planning "the donation of pharmaceutical products and all other supports that are feasible for the company." Global pharmaceutical company Eisai Co. Ltd. has also offered $244,000 to the Tohoku Pacific Earthquake Relief Fund, and several American firms are stepping up to contribute relief efforts.