By Atsuko Fukase And Eric Pfanner
TOKYO--Otsuka Pharmaceutical Co. agreed to buy Avanir
Pharmaceuticals Inc. of the U.S. for $3.5 billion, the latest large
deal by a Japanese drug maker looking to expand overseas.
The deal gives Otsuka, maker of the schizophrenia and depression
drug Abilify, access to more treatments for central-nervous-system
diseases. California-based Avanir sells Nuedexta, a treatment for a
condition known as pseudobulbar affect that causes sudden and
involuntary outbursts in patients with neurological diseases such
as amyotrophic lateral sclerosis.
Otsuka Pharmaceutical, part of Otsuka Holdings Co., said it
would pay $17 a share in cash for Nasdaq-traded Avanir. The deal is
the largest purchase by Otsuka Holdings, which listed its shares in
an initial public offering in Tokyo in 2010, giving it more
resources for acquisitions. Like other Japanese pharmaceutical
companies, Otsuka has been looking abroad as growth slows in the
domestic market, the second-largest after the U.S.
Otsuka Holdings President Tatsuo Higuchi said at a news
conference that Avanir's strengths in neurologic diseases would
complement Otsuka's experience in the area of mental illnesses.
"We'll try to maximize the integration effect," he said.
Avanir Chief Executive Keith Katkin said in a written statement,
"Together, our organizations will be able to more rapidly develop
and commercialize needed medications." Avanir, which was founded in
1988 as Lidak Pharmaceuticals, is conducting trials of medicines
for depression, migraine headaches and other neurological
diseases.
Some pharmaceutical companies have been reducing their
involvement in those areas because of the large number of generic
drugs available and the long period required for clinical trials
and regulatory approval. But Otsuka is trying to build on its
existing business and find new products to make up for Abilify,
whose patent is set to expire in 2015 according to the company.
Otsuka has been bulking up in recent years and bought U.S.
cancer-drug maker Astex Pharmaceuticals Inc. last year for about
$886 million.
"From our experience, we value creativity which can be generated
from cultural diversity and different ways of thinking," Mr.
Higuchi said. "I learned it from the late Chairman Otsuka," he
added, a reference to longtime executive Akihiko Otsuka, who died
last Friday at the age of 77. Mr. Otsuka, a member of the founding
family, was involved in the development of the company's food and
beverage arm, helping to create the Pocari Sweat sports drink and
Calorie Mate energy bar.
Mr. Higuchi said the yen's recent fall didn't affect Otsuka's
decision-making on overseas acquisitions. "We'll make a move when
it should be done," Mr. Higuchi said, adding that Otsuka would use
funds it holds in dollars for part of the purchase.
The acquisition of Avanir is the latest among sizable overseas
deals by Japanese pharmaceutical companies, which have included
Takeda Pharmaceutical Co.'s purchases of Millennium Pharmaceuticals
and Nycomed, Astellas Pharma Inc.'s acquisition of OSI
Pharmaceuticals and Daiichi Sankyo Co.'s deal for a controlling
stake in Ranbaxy Laboratories Ltd.
The deals have given the Japanese companies broader access to
overseas markets, but some have run into trouble. Daiichi sold its
Ranbaxy stake this year, six years after the acquisition, following
a series of regulatory problems. Takeda has faced questions from
shareholders over its integration of Nycomed and Millennium. The
company recently brought in a French executive as president and has
said it would seek to break down internal silos.
Anjie Zheng contributed to this article.
Access Investor Kit for Ranbaxy Laboratories Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=INE015A01028
Access Investor Kit for Otsuka Holdings Co., Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=JP3188220002
Access Investor Kit for Takeda Pharmaceutical Co., Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=JP3463000004
Access Investor Kit for Daiichi Sankyo Co., Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=JP3475350009
Access Investor Kit for Astellas Pharma, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=JP3942400007
Access Investor Kit for Astellas Pharma, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US04623U1025
Access Investor Kit for Avanir Pharmaceuticals, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US05348P4019
Access Investor Kit for Daiichi Sankyo Co., Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US23381D1028
Access Investor Kit for Otsuka Holdings Co., Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US6891641010
Access Investor Kit for Takeda Pharmaceutical Co., Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US8740602052
Subscribe to WSJ: http://online.wsj.com?mod=djnwires