HONG KONG—Two days ago, Luye Pharma Group announced their acquisition of AstraZeneca’s core CNS products, Seroquel and Seroquel XR. As with previous acquisitions such as Lipusu, Xuezhikang, Beixi and Rivastigmine transdermal patch, Luye Pharma made the decision to acquire Seroquel and Seroquel XR based on a comprehensive evaluation of the target. Factors considered include whether the target is a signature product with a high sales volume and high margins, whether it has good competitive positioning, how much it can contribute to existing core product portfolio and whether it can help improve the group’s operating capabilities or optimize strategic resource integration.
Dr. Yehong Zhang, head of Luye Pharma (International) said, “Central nervous system diseases continue to present a challenge to patients and healthcare systems across the world. This transaction represents another step in our effort to build a portfolio and platform to help address this issue. It is an affirmation of our commitment to accelerate our international presence.”
In accordance with the acquisition agreement, Luye Pharma will acquire the assets of Seroquel and Seroquel XR in 51 countries and regions, including China, the United Kingdom, Brazil, Australia, Saudi Arabia, Mexico, South Korea, Thailand, Argentina, Malaysia and other countries and regions in Asia, Latin America, Africa, Oceania and Eastern Europe. The assets include marketing authorizations, regulatory information, certain patents, relevant business materials and data, manufacturing know-how and sales networks, among others. In addition, AstraZeneca has agreed to grant exclusive, permanent, free and sub-licensable trademark licensing, along with other licensing rights, to Luye Pharma. The total transaction amount of US $546 million will be paid by Luye Pharma in four installments over the coming years, with an initial payment of US$260 million.
Handover work will start upon the completion of the initial payment, with the production technology for the two drugs gradually transferred to Luye Pharma. The Seroquel series products, especially Seroquel XR, has an advanced production process. Due to this, Luye Pharma plans to introduce these technologies to China after the acquisition, which will also be the first time that production technology for Seroquel XR reaches China. Shandong Luye Pharmaceutical Co., Ltd. will be the future production base for the global supply of the Seroquel series, not only strengthening the production capacity of the new formulations, but also allowing for further alignment with the global production quality system.
In addition to the synergetic effect on production, the successful acquisition of the Seroquel series assets will also bring synergies to the overall development and strategic planning of Luye Pharma’s business in the international market, including in the building of sales channels. Luye Pharma plans to invest resources to enhance market development through efficient management systems and extensive business networks, fully tapping into Seroquel’s sales potential in international markets. The global commercialization network brought about by this acquisition will also significantly increase the sales efficiency of Luye Pharma in Europe, including consolidation of sales teams in existing markets as well as increased commercial coverage in emerging markets.
Seroquel (quetiapine fumarate, immediate release, IR) and Seroquel XR (extended release formulation) are atypical anti-psychotic medicines with antidepressant properties. The main indications for Seroquel are the treatment of schizophrenia and bipolar disorder. Seroquel XR is also approved in some markets for major depressive disorder and generalized anxiety disorder. Because of their fast onset, good tolerability and high patient compliance, Seroquel series products are widely recognized by doctors and patients, and are currently marketed in more than 80 countries around the world with total number of prescriptions exceeding 10 million.
In 2017, sales revenue for Seroquel series products in Asian countries and regions, including China, was approximately US $74 million. In China, Seroquel is listed in category B of the 2009 edition of the National Drug Reimbursement List (NDRL); Seroquel XR also entered into NDRL via medical insurance negotiations in July 2017. According to IMS Health data, sales revenue for Seroquel and Seroquel XR in China are expected to exceed RMB $1 billion, with a good deal of space for sales growth in international markets.