AstraZeneca Sells Part of its Antibiotics Business to Pfizer -- Update
August 24 2016 - 4:46AM
Dow Jones News
By Denise Roland
LONDON-- AstraZeneca PLC has agreed to sell part of its
antibiotics business to Pfizer Inc. for up to $1.575 billion plus
royalties.
Under the terms of the deal Pfizer will pay Astra $550 million
upfront plus an unconditional $175 million in January 2019. Then,
depending on the progress and commercial success of the drugs in
question, it will pay a further $850 million plus royalties.
The deal involves three already-approved antibiotics and two
drugs in clinical trials. It will give Pfizer the right to sell
those drugs in most markets outside the U.S. and Canada.
Allergan PLC holds the North American rights to four of the
drugs. For the fifth drug, Merem, Pfizer will get the North
American rights.
It doesn't involve Astra's portfolio of biological
anti-infective drugs, or the business it spun out last year to
focus on the development of early-stage antibiotics.
Pfizer said the drugs would add to its "essential health"
business, which sells older products including those that have lost
patent protection. The U.S. company already has a portfolio of more
than 60 anti-infective and antifungal medicines, said John Young,
head of that unit.
Luke Miels, executive Vice President for Europe and head of
antibiotics at Astra, said in Pfizer's hands the drugs would "reach
greater numbers of patients around the world."
The U.S. drugmaker was one of several pharmaceutical companies
to exit antibiotic research and development in recent years, though
it continues to sell older products.
The pharmaceutical industry has largely turned away from
antibiotic research due to the low likelihood of getting a return
on investment. Any new class of antibiotics would need to be used
sparingly to conserve their effectiveness, meaning sales would be
slow.
Governments around the world are now looking for ways to
encourage large companies to come back into the space to help
address a global rise in antimicrobial resistance.
The deal with Pfizer forms part of Astra's "externalization"
strategy: offloading drugs that don't fall into its core therapy
areas of cardiovascular and metabolic disease, oncology, and
respiratory, inflammation and autoimmunity.
Normally these deals boost Astra's top line, but in this case
the proceeds will be reported under operating income. The company
said that was because Astra won't retain a significant long-term
interest or stake in the future development of the business.
Write to Denise Roland at Denise.Roland@wsj.com
(END) Dow Jones Newswires
August 24, 2016 04:31 ET (08:31 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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