Daiichi Sankyo Seeking Small Biotech Acquisitions In Europe 

Daiichi Sankyo is scanning Europe for potential acquisitions that would help the Japanese company expand its market reach and enhance its product pipeline. Daiichi will focus on smaller biotechnology companies that have a strong oncology focus and a promising pipeline.

"Like other major pharmaceutical companies, Daiichi Sankyo is consistently looking for acquisitions, not only in Europe, but in other parts of the world," said Thomas Portz, a spokesman for the Munich, Germany-based Daiichi Sankyo Europe GmbH.

Portz told PharmAsia News: "Currently, we are looking for smaller biotechnology companies (in Europe) that have an oncology focus."

Japan's third largest drug maker last year paid €150 million ($233.5 million) to acquire German biotech outfit U3 Pharma AG. Specialized in developing cancer-treating antibody drugs, U3 Pharma previously partnered with Amgen to develop a HER-3 receptor antagonist. (Also see "Daiichi Nets Novel HER-3 Antibody With U3 Acquisition" - Scrip, 22 May, 2008.)

Daiichi Sankyo has ruled out the possibility of acquiring either Nycomed A/S of Switzerland or Solvay SA of Belgium. "Nycomed's and Solvay's products don't fit in our pipelines," explained spokesman Portz. "Considering our cash position, we don't want to acquire someone as big as Ranbaxy."

Daiichi Sankyo acquired Ranbaxy Laboratories, the largest Indian drug manufacturer, in October 2008 by purchasing 52.5 percent of Ranbaxy's total share capital for $736 million. (Also see "Ranbaxy Officially Becomes A Daiichi Subsidiary As Management Turns To Business Synergies" - Scrip, 20 Oct, 2008.).

That acquisition has since dealt Daiichi Sankyo several setbacks; Ranbaxy is undergoing a comprehensive investigation by U.S. FDA officials after the agency found deviations from good manufacturing practices at Ranbaxy's manufacturing site in India's Paonta Sahib. Ranbaxy has been accused of submitting fraudulent data. (Also see "U.S. FDA Nails Ranbaxy On Charges Of Falsifying Data; Halts All Application Reviews From Paonta Sahib Plant" - Scrip, 26 Feb, 2009.)

Daiichi suffered its first annual loss since the merger with Sankyo in 2005, with the ¥335.8 billon net loss a direct result of ¥351.3 billion in write-offs for Ranbaxy. (Also see "Daiichi Sankyo Reports First Annual Loss Since 2005 Merger; Plans To Improve Ranbaxy Management" - Scrip, 14 May, 2009.) Daiichi recently reshuffled Ranbaxy's top management and assumed complete control over the company.

Another Munich-based German biotech, MorphoSys, could become an acquisition target for Daiichi. The two companies previously entered into a research agreement on human combinatorial antibody library technology, which was extended in May, with Daiichi collaborating with MorphoSys on two oncology-focused therapeutic antibody programs.

Portz said he couldn't comment on individual acquisition targets, and he pointed out that other major drug makers, such as Novartis, have also partnered with MorphoSys.

One analyst said that Lundbeck, a Danish drug maker, is also rumored to be a potential acquisition target.

"We are only focusing on oncology acquisitions for now. In cardiology, we will consider if the right companies present themselves," added Portz.

Daiichi Sankyo Makes Big Splash In Europe

Aiming to become a global innovator, Daiichi aims to shift its market sales ratios from the current 60 percent of turnover from the Japanese market to 60 percent from overseas markets by 2015. One key area identified by the company for that change is Europe.

After the launch of its anti-platelet drug Efient (prasugrel) for patients with acute coronary syndrome undergoing an artery-opening procedure in the U.K in April, Daiichi, along with partner Eli Lilly, is co-marketing prasugrel in Germany and is looking at other parts of the continent.

In the U.S., Daiichi and Lilly are still waiting for regulatory approval. Daiichi said prasugrel is moving closer to a U.S. go-ahead with a unanimous approval recommendation from the FDA's advisory committee in February. (Also see "Daiichi/Lilly’s Prasugrel Overcomes Cancer Hurdle, Receives Favorable Panel Recommendation" - Scrip, 3 Feb, 2009.)

But on June 3, consumer group Public Citizen filed a petition asking FDA to hold up prasugrel review for further data. (Also see "Public Citizen Seeks To Hold Up Lilly Prasugrel Review For Further Data" - Pink Sheet, 8 Jun, 2009.)

Although jobs are being cut throughout the pharmaceutical sector around the world, Daiichi Sankyo is expanding its work force in Europe. The company acquired 130 sales representatives from Merck KGaA's subsidiary Merck Serono in Germany in 2008. (Also see "Daiichi Sankyo To Expand European Presence With Acquisition Of 130 Merck KGaA Medical Reps" - Scrip, 4 Aug, 2008.). It also established a Turkish subsidiary in March and a branch in Ireland in November, 2008. Daiichi acquired a total of 600 reps in 2008.

"We currently have 1500 sales reps in Europe," said Portz. "We will be looking for specialists - not sales reps any more - [and] we will be hiring hundreds and hundreds more in the coming years."

- Brian Yang ([email protected])