A Move Aimed at Enriching the Existing CNS Portfolio and
Enhancing Strategic Synergy across International Markets
HONG KONG, May 27, 2018 /PRNewswire/ -- Luye Pharma Group
recently 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 optimize strategic resource
integration.
1. Revenues Driven by Acquisition of
Signature Products
Seroquel (quetiapine fumarate, immediate release, IR) and
Seroquel XR (extended release formulation) 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 generalized anxiety disorder. Because
of their fast onset, good tolerability and high patient compliance,
Seroquel series products are widely recognized 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
authorizations, 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 U.S.
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 Organization 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."
2. Strategy behind the
Acquisition
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.
1) Building a Product Portfolio with a Global
Competitive Edge
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. Luye Pharma
plans to launch LY03004 in China
and the United States by the end
of this year. Rotigotine Extended-Release Microspheres for
Injection (LY03003) for the treatment of Parkinson's disease has
been approved for Phase III clinical trials in China, and exempted from Phase II clinical
trials in the United States, with
a scheduled launch time in China
and the United States set for next
year. Ansofaxine Hydrochloride Extended-Release Tablets (LY03005)
for the treatment of depression has completed Phase II clinical
trials in China and has reached
the primary efficacy endpoint. Other new drug development projects
such as the Rivastigmine Multi-Day Transdermal Patch (30410) for
the treatment of mild to moderate Alzheimer's disease are also
progressing smoothly.
Seroquel and Seroquel XR can complement with Risperidone
Extended-Release Microspheres and Ansofaxine Extended-Release
Tablets in both domestic and overseas markets, as they can serve
the same patient population and there is no exclusive competition
when these drugs share channels and promotional resources. Seroquel
and Seroquel XR can contribute, with their readily available
domestic and international commercial resources, to the launch and
accessibility of new CNS drugs, such as Risperidone
Extended-Release Microspheres and Ansofaxine Extended-release
tablets, as well as comprehensively enhance the global
competitiveness of Luye Pharma's CNS portfolio.
2) Enhancing the Synergy across International
Markets
Handover work will start upon the completion of the initial
payment, with the production technology for the two drugs gradually
transferred to Luye Pharma. The Seroquel series products,
especially Seroquel XR, has a very advanced production processes,
due to this, Luye Pharma plans to introduce these technologies to
China after the acquisition, which
will also be the first time that production technology for Seroquel
XR reaches China. Shandong Luye
Pharmaceutical Co., Ltd. will be the future production base for the
global supply of the Seroquel series, not only strengthening the
production capacity of the new formulations, but also allowing for
further alignment with the global production quality
system.
In addition to the synergetic effect on production, the
successful acquisition of the Seroquel series assets will also
bring synergies to the overall development and strategic planning
of Luye Pharma's business in the international market, including in
the building of sales channels. Luye Pharma will invest resources
to enhance market development through efficient management systems
and extensive business networks, fully tapping in to Seroquel's
sales potential in the international markets. The global
commercialization network brought about by this acquisition will
also significantly increase the sales efficiency of Luye Pharma in
Europe, including consolidation of
sales teams in existing markets as well as increased commercial
coverage in emerging markets.
3) Brand Equity Enhancement
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
internationalization, Luye Pharma is actively seeking the best
M&A opportunities.
3. The "One Belt and One Road"
Effect
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.