Otsuka spends $3.5B for Avanir--and patent-cliff protection

Otsuka's patent cliff is coming, with the expiration date on best-seller Abilify's IP shield just around the corner. But now, the Japanese pharma has signed a $3.5 billion agreement to pick up Avanir Pharmaceuticals ($AVNR) that could help soften the blow.

On Tuesday, Otsuka announced that its subsidiary Otsuka Pharmaceutical would pay $17 per share in cash for Aliso Viejo, CA-based Avanir--a premium of 13.3% to Avanir's closing price on Monday, Reuters says. The companies expect the all-cash deal for Avanir--Otsuka's biggest ever, according to the news service--to close in the first quarter of next year.

At that time, Otsuka will bring Avanir's Neudexta into the fold. The only approved treatment for the neurologic disease pseudobulbar affect, Neudexta raked in $94 million in sales between July 2013 and June 2014--a 50% leap over the prior-year period.

Otsuka could use the help as it heads into the last few months of Abilify's patent life, set to run out in April 2015. The antipsychotic drug--the world's No. 10 best-selling drug in 2013--brought in more than 575.7 billion yen ($5 billion) for Otsuka last year, Reuters reports, making up about 40% of the company's top-line haul. But much of that could soon be in jeopardy, with generics makers getting ready to pounce in the U.S.--Abilify's biggest market.

Otsuka President Taro Iwamoto

Avanir will also bring along some pipeline prospects--including a late-stage candidate for agitation associated with Alzheimer's disease--that might one day be able to help fill the sales gap, as well as some neurological development and commercialization experience that Otsuka says will complement its psychiatric disease capabilities nicely. "Avanir's creativity and proven execution … represents a hand-in-glove fit with Otsuka's culture," company president Taro Iwamoto said in a statement.

- read Otsuka's release
- get more from Reuters

Special Report: The 10 best-selling drugs of 2013 - Abilify

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