Takeda Divests Eye Drug to Novartis for $5.3 Billion

Takeda logo on side of large building

In January, Takeda Pharmaceutical announced plans to sell about $10 billion worth of assets to offset some of the debt the company garnered in its $62 billion acquisition of Shire. On Wednesday, the Osaka, Japan company announced divestitures worth about $5.7 billion.

Takeda entered into agreements with Swiss pharma giant Novartis and Ethicon. Novartis agreed to acquire Xiidra (lifitegrast ophthalmic solution) 5% product for $3.4 billion up front in cash and up to an additional $1.9 billion in potential milestone payments. Also, Takeda sold its TachoSil Fibrin Sealant Patch to Ethicon, Inc. for $400 million in cash. Takeda plans to take the proceeds from these sales and reduce its debt, the company said.

Not only will the sale of the assets help drive down some of the $30 billion debt load the company has, but the reduction of the assets will allow the company to focus business areas core to its long-term growth. The acquisition of Shire gave Takeda a significant focus on rare diseases, as well as a much larger footprint in the U.S. drug market.

“These initial divestitures represent important steps in advancing the growth strategy Takeda outlined following our transformational acquisition of Shire earlier this year,” Christophe Weber, Takeda’s president and chief executive officer said in a statement. “We are working to strategically simplify and optimize our portfolio, while also rapidly deleveraging and continuing to invest in our growth drivers as a global, values-based, R&D-driven biopharmaceutical leader.”

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Following the acquisition of Shire, Takeda will focus on its key business areas – Gastroenterology, Rare Diseases, Plasma-Derived Therapies, Oncology and Neuroscience. This focus enables Takeda to continue to deliver highly-innovative medicines and transformative care to patients around the world, creating long-term value for Takeda shareholders, the company said.

When the Xiidra deal with Novartis closes, about 400 Takeda employees based in the United States and Canada will become Novartis employees, according to the terms of the deal. The agreement is expected to close in the second half of calendar year 2019. Xiidra is the first and only prescription treatment approved by the U.S. Food and Drug Administration for both signs and symptoms of dry eye disease, with a mechanism of action that targets inflammation. Net sales for Xiidra in 2018 were $388 million. Xiidra, which Takeda gained from its deal with Shire, was approved in 2016 and seen as a potential competitor to Allergan’s blockbuster dry-eye treatment, Restasis.

Novartis recently spun its eye care business Alcon off into a standalone entity, but maintained its prescription eye treatments as part of its core pharmaceutical unit.

Takeda’s deal with Ethicon for the surgical patch will include the transition of about 80 employees to the New Jersey-based company. TachoSil, which is designed to achieve safe, fast and reliable bleeding control, generated about $155 million in net sales in 2018, the company said.

While Ethicon has acquired the assets and licenses that support the manufacturing, licensing and commercialization of TachoSil, Takeda maintained ownership of the manufacturing facility in Linz, Austria that makes the patch. Takeda entered into a long-term manufacturing services agreement with Ethicon to manufacture and supply TachoSil to that company. Like the Novartis deal, Takeda expects this deal to close in the second half of calendar year 2019.

Takeda said it does not anticipate the divestitures to have an impact on its earnings forecast for the fiscal year, which will be announced next week on May 14. The forecast will be updated at a later date to reflect these divestitures once a reliable estimate of their impact can be made, which will depend upon the exact timing of transaction close, the company said.

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