Luye Pharma Group, a leading specialty pharmaceutical company, announced their acquisition of AstraZeneca's core CNS products - Seroquel and Seroquel XR. As with previous acquisitions such as Lipusu, Xuezhikang, Beixi and Rivastigmine Transdermal Patch, the decision to acquire Seroquel and Seroquel XR was made by Luye Pharma based on a comprehensive evaluation of the target. Factors considered include: whether the target is a signature product with a high sales volume and high margins, whether it has good competitive positioning, how much it can contribute to existing core product portfolio and whether it can help improve the group's operating capabilities or optimise strategic resource integration.
Seroquel and Seroquel XR are atypical anti-psychotic medicines with antidepressant properties. The main indications for Seroquel are the treatment of schizophrenia and bipolar disorder. Seroquel XR is also approved in some markets for major depressive disorder and generalised anxiety disorder. Because of their fast onset, good tolerability and high patient compliance, Seroquel series products are widely recognised by doctors and patients, and are currently marketed in more than 80 countries around the world with total number of prescriptions exceeding 10 million.
In accordance with the acquisition agreement, Luye Pharma will acquire the assets of Seroquel and Seroquel XR in 51 countries and regions including China, the United Kingdom, Brazil, Australia, Saudi Arabia, Mexico, South Korea, Thailand, Argentina, Malaysia and other countries and regions in Asia, Latin America, Africa, Oceania and Eastern Europe. The assets include marketing authoriisations, regulatory information, certain patents, relevant business materials and data, manufacturing know-how and sales networks, among others. In addition, AstraZeneca has agreed to grant exclusive, permanent, free and sub-licensable trademark licensing, along with other licensing rights, to Luye Pharma. The total transaction amount of 546 million US dollars will be paid by Luye Pharma in four installments over the coming years, with an initial payment of US $260 million.
According to World Health Organiisation statistics, there are currently around 300 million people in the world suffering from depression, 60 million people affected by bipolar disorder, and 23 million people suffering from schizophrenia. According to data from the Center for Mental Health at the Chinese Center for Disease Control and Prevention, there are over 100 million people in China with some form of mental illness, more than 6.4 million of which suffer from schizophrenia and approximately 1.1 million of which suffer from bipolar disorder.
In 2017, sales revenue for Seroquel series products in Asian countries and regions including China was approximately US$74 million. In China, Seroquel is listed in category B of the 2009 edition of the National Drug Reimbursement List (NDRL); Seroquel XR also entered into NDRL via medical insurance negotiations in July 2017. According to IMS data, sales revenue for Seroquel and Seroquel XR in China are expected to exceed RMB 1 billion, with a good deal of space for sales growth in international markets.
Dr. Yehong Zhang, head of Luye Pharma (International) said: "Central nervous system diseases continue to present a challenge to patients and healthcare systems across the world. This transaction represents another step in our effort to build a portfolio and platform to help address this issue. It is an affirmation of our commitment to accelerate our international presence."
In terms of business strategy and product pipelines, Luye Pharma adheres to the principle of long-term planning with the aim of systemic and sustainable development. Together with the acquisition of Acino's transdermal patch and implants business, and the establishment of a company in Europe, Luye Pharma has created a rich portfolio of treatment solutions in the global CNS market, and successfully built a global business operation model through synergy achieved between R&D, manufacturing, and sales and marketing at home and abroad. This lays a solid foundation for the international promotion of its microsphere technology. The introduction of Seroquel's global channels, brand reputation and mature technology will play a crucial role in enriching Luye Pharma's global product portfolio and the synergy between different strategic markets.
In terms of pipeline development in CNS, one of Luye Pharma's four core therapeutic areas, Luye Pharma currently has multiple drug candidates under development in both China and overseas markets: Risperidone Extended-Release Microspheres for Injection (LY03004) for the treatment of schizophrenia and bipolar disorder was approved by the FDA for exemption from pediatric trials on submission of its NDA in the United States.
The acquisition is expected to increase Luye Pharma's brand equity and create opportunities for cooperation with more and more first-class partners in the future. On the road to internationaliisation, Luye Pharma is actively seeking the best M&A opportunities.
The acquisition involves business in a number of Asian and Eastern European countries and regions which are also covered by China's "One Belt and One Road Initiative". This will facilitate the launch and promotion of Luye Pharma's existing products in major markets into the "One Belt and One Road" markets.