Novartis Snaps Up Xiidra Eye Drops in $5.3 Billion Deal

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Swiss pharmaceutical company Novartis International AG (NYSE:NVS) (Basel, Switzerland) has agreed a $5.3 billion deal to purchase a number of eye-disease medicines from Takeda Pharmaceutical (Osaka, Japan).

Industrial Info is tracking more than $800 million in project activity by Novartis.

Click on the image at right for a graph showing Novartis project activity by country.

The company has agreed to an upfront payment of $3.4 billion, with potential milestone payments of up to $1.9 billion. The key medicine purchased is the Xiidra prescription drops for relieving dry-eye disease that will give Novartis a product to go head-to-head to compete with leading product Restasis from Allergan plc (NYSE:AGN) (Dublin, Ireland), maker of Botox. Xiidra is described as the "first and only prescription treatment approved to treat both signs and symptoms of dry eye by inhibiting inflammation caused by the disease." The product recorded sales of $400 million in 2018 and Novartis claimed "is well positioned for blockbuster potential." As part of the agreement, Novartis will be taking on approximately 400 employees--mainly in the U.S. and Canada--associated with the product.

The company said it will bolster its "front-of-the-eye portfolio and ophthalmic leadership." The deal comes a month after Novartis completed the planned spinoff of its Alcon eye-care device business in order to focus its spending and resources on medicines. Alcon is the largest eye care device company in the world, with complementary businesses in surgical and vision care. Novartis retained Alcon's eye medicines for its pharmaceutical business. For additional information, see April 24, 2019, article - Novartis Completes Spinoff of Alcon Eye Care Business.

"Xiidra, with its unique dual benefits, is an example of the type of innovative advances we invest in for the benefit of patients," said Paul Hudson, chief executive officer of Novartis Pharmaceuticals. "We look forward to leveraging our well-established commercial infrastructure to bring this medicine to more patients."

Takeda's sale comes as the company strives to divest itself of up to $10 billion in assets following the completion of its $62 billion takeover of Shire plc last year. As the largest foreign takeover by a Japanese company, the takeover came with up to $31 billion in debt, and Takeda has previously announced plans to quickly reduce that load by up to $10 billion worth of sell-offs. It has also agreed to sell its surgical patch, Tachosil, to Ethicon Incorporated for $400 million.

"These initial divestitures represent important steps in advancing the growth strategy Takeda outlined following our transformational acquisition of Shire earlier this year," said Christophe Weber, president and chief executive officer of Takeda. "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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