Dainippon Sumitomo Pharma to Acquire Sepracor

In a move designed to increase its position in North America, Dainippon Sumitomo Pharma (DSP, Osaka, Japan) agreed to acquire the specialty pharmaceutical company Sepracor (Marlborough, MA) for $2.6 billion.

“Sepracor has pursued growth through development of its unique pipeline and introduction of innovative pharmaceutical products to the market, a strategy that fits perfectly with our management philosophy,” said Masayo Tada, president of DSP, in a company press release. “We expect that Sepracor will become a ‘Center of Excellence’ for DSP in the US and will make a significant contribution to DSP both as a commercialization infrastructure for our self-developed products and as a strategically important base for business development.”

Sepracor had 2008 revenues of approximately $1.3 billion. DSP says the Sepracor acquisition provides it with a US and Canadian pharmaceutical platform in terms of management and employee base, as well as a portfolio of products. Sepracor’s currently marketed products in the United States include: Lunesta (eszopiclone) for treating insomnia in adults; Xopenex (levalbuterol hydrogen chloride) inhalation solution and Xopenex HFA (levalbuterol tartrate) for treating bronchospasm; Brovana (arformoterol tartrate) inhalation solution for treating bronchoconstriction in patients with chronic obstructive pulmonary disease; Omnaris (ciclesonide) nasal spray for treating allergic rhinitis; and Alvesco (ciclesonide) HFA inhalation aerosol for the maintenance treatment of asthma. In addition, Sepracor’s commercial organization in the US, the company's wholly owned subsidiary Sepracor Pharmaceuticals, markets in Canada several additional products for treating cardiovascular issues, the central nervous system (CNS), pain, and infectious diseases.

DSP also is interested in using Sepracor’s expertise to develop and commercialize lurasidone, DSP’s internally developed drug candidate for treating schizophrenia, which is in Phase III clinical development, as well as other pipeline products. Some promising pipeline candidates from Sepracor include Stedesa (eslicarbazepine acetate) for treating epilepsy and other potential indications, Omnaris HFA, a nasal aerosol formulation of ciclesonide, and other early- and mid-stage CNS and respiratory assets.

Upon completion of the acquisition, Sepracor will become a wholly owned subsidiary of Dainippon Sumitomo Pharma America Holdings, a wholly owned US subsidiary of DSP, and will continue its operations in Marlborough, Massachusetts, and Canada. Sepracor will retain its name, branding, and intellectual-property rights and continue to operate as Sepracor. DSP will commence a tender offer no later than Sept. 15, 2009 to purchase all of the outstanding shares of Sepracor common stock for $23.00 per share in cash. The companies expect the tender offer to close in the fourth quarter of 2009.

DSP was formed from the 2005 merger of Sumitomo Pharmaceuticals and Dainippon Pharmaceuticals. DSP’s pending acquisition of Sepracor is another example of recent acquisitions by Japanese pharmaceutical companies of drug companies outside of Japan. These deals include: Takeda Pharmaceutical’s (Osaka, Japan) $8.8-billion acquisition of Millennium Pharmaceuticals (Cambridge, MA) in 2008; Eisai’s $3.9-billion acquisition of MGI Pharma (Bloomington, MN) in 2008; and Daiichi Sankyo’s (Tokyo) purchase of a controlling stake in Ranbaxy Laboratories (Gurgaon, Haryana, India) in 2008.