Japanese pharmaceutical company Astellas Pharma has agreed to acquire US biotech firm Iveric Bio for $5.9bn. The acquisition is Astellas’ largest ever and will give the company access to the rapidly growing market for age-related eye diseases. The purchase will be made using cash and loans and will involve buying Iveric at $40 per share, a 22% premium on the US firm’s Friday closing price. Astellas has spent over ¥1tn ($7.3bn) on overseas acquisitions and partnerships since 2007, including a $3bn purchase of US drugmaker Audentes Therapeutics last year and a $3.8bn takeover of US-based oncology specialist OSI Pharmaceuticals in 2010.
The acquisition of Iveric will add its ACP treatment to Astellas’ portfolio. The treatment is currently undergoing trials for geographic atrophy, an eye disease affecting 1.6 million patients in the US. Naoki Okamura, Astellas’ new CEO, said that the company had been interested in ACP for a long time and seized the opportunity when he was informed that Iveric was up for sale in March. Okamura, who took the helm of Astellas in April, wants to grow ACP into a third pillar of the business, alongside menopause drug candidate fezolinetant and bladder cancer treatment padcev.
Astellas is under pressure to find new blockbuster medicines with sales of $1bn or more per year. Its US patent for prostate cancer drug Xtandi, whose sales are shared with Pfizer, is due to expire in 2027. While the company is forecasting sales of ¥670bn from Xtandi for the current fiscal year until March 2024, analysts say sales are slowing faster than expected in the US. Astellas’ development of new drugs has not progressed as quickly as it had forecast, and its market capitalisation is currently only ¥3.8tn, compared to the ¥7tn it had aimed for by fiscal 2025.
The acquisition of Iveric may reassure investors concerned about Astellas’ expiring patents. Shinya Tsuzuki, an analyst at Mizuho, said that while the acquisition appeared to diverge from Astellas’ usual strategy of buying early-stage products, the purchase of ACP was a best-in-class product that would increase the company’s chances of achieving its longer-term financial targets. Shares in Astellas closed 2.2% higher following the announcement of the acquisition.
Okamura said the acquisition would increase the chances of Astellas reaching its longer-term financial targets, but he did not rule out further acquisitions, stating that the company’s radar is always screening for opportunities. He added that US-China geopolitical tensions and the weaker yen would not significantly affect the company’s M&A strategy.