Japan's Takeda ready for fresh acquisitions after $5.2 billion Ariad deal

Tue Jan 10, 2017 2:10am EST
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TOKYO (Reuters) - Japan's Takeda Pharmaceutical Co (4502.T: Quote) flagged its appetite for fresh acquisitions to bolster its drug portfolio after agreeing on Monday to acquire cancer drug maker Ariad Pharmaceuticals ARIA.O in a $5.20 billion deal.

The Ariad transaction, at a 75 percent premium, is the latest example of the world's pharmaceutical giants paying handsomely to snap up promising drugs owned by rivals in a bid to secure stable revenue growth particularly in the burgeoning therapeutic markets such as treatments for cancer or rare diseases

Pfizer Inc (PFE.N: Quote) agreed in August to pay $14 billion for Medivation Inc, the maker of the $2.2 billion-a-year cancer drug Xtandi. In 2015, AbbVie Inc (ABBV.N: Quote) forked out $21 billion for Pharmacyclics, giving it ownership with Johnson & Johnson (JNJ.N: Quote) of blockbuster leukemia drug Imbruvica.

Takeda's move comes as it readies to fend off imminent generic competition for its top-selling blood cancer drug Velcade, with other key products slated to go off patent later from 2020.

Its Chief Financial Officer James Kehoe said that sound finances would keep the Japanese company in that hunt for potential hit drugs.

"Should the right deal come along we have the capacity," Kehoe said during a conference call after Takeda announced the Ariad purchase. The company was in a position to limit its debt burden and retain a strong credit rating, he said.

At the end of its last business year that ended on March 31, Takeda had 438 billion yen ($3.79 billion) in cash and cash equivalents.

Takeda's Chief Executive Officer Christophe Weber said on the same call that while there were not many opportunities to buy cancer drugs and central nervous system drugs, such as Alzheimer remedies and bipolar treatments, the company, nevertheless, would make acquisitions "that make sense".

Weber said the potential returns from Ariad's lung cancer treatment, Brigatinib, and its leukemia drug, Iclusig, along with other formulas in its pipeline justified the high premium.   Continued...

Logos of Japanese Takeda Pharmaceutical Co are seen at an office building in Glattbrugg near Zurich March 7, 2012.   REUTERS/Arnd Wiegmann/File Photo   - RTX2RH16