Japan's Takeda to buy US cancer drug maker Ariad for $5.2bn

Company - Himanshu Gill - Jan 10,2017

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japans takeda to buy us cancer drug maker ariad for 5 2bn

Japan’s Takeda Pharmaceutical Co said that it will buy US-based cancer drug maker Ariad Pharmaceuticals for $5.20 billion.

Takeda agreed to pay $24 for each Ariad share, a premium of about 75 percent of its total value. Ariad stocks were up by 73 percent this week, trading at $23.77. Its shares have almost doubled in 2016.

In September last year, Takeda had revealed its plans of making multi-billion dollar acquisitions to reduce the company’s dependence on domestic sales. The deal has been approved by the board members of the companies but is still subject to receive a green signal from US regulatory bodies.

Osaka-based Takeda led by Christophe Weber, made a major acquisition in 2011 as well, when it took over Switzerland’s Nycomed for $13.6 billion.

Ariad is specialized in making medicines for patients with rare forms of leukemia and other rare forms of cancer. Cancer drugs are always appealing to large pharmaceutical firms, who are prepared to take risks and pay higher prices for companies with promising and innovative products in the pipeline.

Takeda is targeting new drugs to help increase its future sales, as its top-selling blood cancer medicine Velcade is likely to face competition from lower-priced drugs this year. Patents on some of its other key products will also expire in 2020, meaning that others can replicate the medicines thereafter.

The deal is expected to give Takeda a strong foothold in the US market. Although, commercial cancer treatments are highly sought after by drug makers but the pricing of these drugs is also very sensitive.

Ariad came under fire from US politicians like Bernie Sanders for raising the price of its Iclusig drug four times in one year. Takeda has paid a massive premium for the deal and it will be under scanner in case it raises the drug prices to claw back its spending.