Kyowa Kirin offloads mature drugs to Grünenthal amid 'challenging business environment'

Following a biopharma industry trend, Kyowa Kirin is narrowing its focus by offloading some mature medicines.

The Japanese drugmaker will spin its international established medicines portfolio into a new joint venture with German company Grünenthal. The franchise includes 13 brands in the Europe, Middle East and Africa (EMEA) region, according to Kyowa Kirin.

For a 51% stake in the new firm, Grünenthal is paying Kyowa Kirin 70 million pounds sterling ($85 million). As part of the deal, Kyowa Kirin retains an option to bow out and leave the business in Grünenthal’s full custody in the first quarter of 2026. Grünenthal intends to purchase the remaining shares and take full control at that time, the two companies said.

In explaining its reason for the deal, Kyowa Kirin said it “strives to create and deliver novel medicines with life-changing value.” Besides, COVID-19 and increased geopolitical risks have created a “challenging business environment,” the company added (PDF).

“There is an urgent need to enhance efficiency and ensure a stable supply of high-quality pharmaceuticals amid rapidly rising costs, including infrastructure, and to optimize growth strategies,” Kyowa Kirin explained.

The 13 brands covered in the agreement span across six therapeutic areas, including pain management, a focus area which Grünenthal is known for. The products include Astral and PecFent for cancer pain, Moventig for opioid-induced constipation and Adcal-D3 for osteoporosis, according to the companies. Together, the portfolio generated about 200 million euros ($210 million) revenues last year.

The Japanese pharma company believes Grünenthal’s strengths in the EMEA region and pain meds make it a perfect partner for the 13 brands and that the collaboration should lead to sustainable business growth. Grünenthal also likes how the Kyowa Kirin portfolio fits with its own.

“As a leader in pain management, and with our proven track record in growing established brands, we believe we can help even more patients benefit from this unique group of medicines,” Grünenthal CEO Gabriel Baertschi said in a statement.

The deal follows a Bloomberg report in June that said Kyowa Kirin was weighing a sale of certain mature medicines from its international unit. But the reported asset value was pegged way higher at $1 billion.

Kyowa Kirin’s EMEA business has been growing lately. In the first nine months of 2022, its revenues climbed 20.6% year over year to reach 48 billion Japanese yen ($350 million). But that performance was mainly thanks to what the company calls “global strategic products,” including Ultragenyx-partnered rare disease drug Crysvita, which in August received an expanded European approval in tumor-induced osteomalacia.

Kyowa Kirin joins a growing list of pharma companies that are slimming down to focus on a group of innovative medicines. Fellow Japanese compatriot Takeda recently came off a $10 billion-plus sell-off spree following its $59 billion Shire acquisition. Another Japanese drugmaker, Daiichi Sankyo, has also been divesting legacy products to focus on its rising oncology portfolio led by AstraZeneca-partnered Enhertu. Big Pharma companies such as Johnson & Johnson, AstraZeneca, Pfizer, Novartis and GSK have also made asset castoffs lately.

Large pharma’s retreat has benefited smaller companies like Grünenthal, which are looking to expand their businesses. Grünenthal earlier this month closed a 495 million euro deal to acquire testosterone therapy Nebido from Bayer.