Japanese pharma firm will buy its way into lucrative US drugs market

City A.M. Reporter
JAPANESE drugmaker Astellas Pharma has agreed to buy US biotech OSI Pharmaceuticals for $4bn (£2.8bn) in cash in a sweetened bid that will add OSI’s blockbuster cancer drug Tarceva to its line-up.

Astellas has been chasing OSI as it seeks to bolster a nascent cancer drug business as a future earnings pillar amid falling earnings in its core, transplant and urinary therapeutic areas.

It marks the biggest deal ever for Astellas and the latest move by a Japanese pharmaceutical company to snap up a US biotech company.

Astellas will pay $57.50 per OSI share, 11 per cent more than a previously proposed $52. The new price represents a 55 per cent premium to OSI’s last closing price before Astellas launched a hostile bid on 1 March.

“It’s positive that it was cheaper than some market expectations of over $60 a share. But it will take a while for Astellas to generate synergies from the acquisition,” said Atsushi Seki, a drugs analyst at Barclays Capital.

Astellas, which sells the urinary drug Flomax and transplant drug Prograf, wants OSI to boost its US profile and oncology presence as it faces generic competition for its flagship drugs, which recently lost patent protection.

The boards of directors of both companies have unanimously approved the deal.

The OSI bid is Astellas’ second attempt to break into the US market after it failed last year with a hostile bid for CV Therapeutics.