Drug Maker Otsuka To Acquire Astex Pharmaceuticals, Inc. (NASDAQ:ASTX)

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Dallas, Texas 09/06/2013 (Financialstrend) – Japan’s Otsuka Holdings Company entered into an agreement with acquire Astex Pharmaceuticals, Inc. (NASDAQ:ASTX) for an acquisition. Otsuka, a renowned drug maker of Japan has agreed to buy Astex Pharmaceuticals Inc for around $886 million. The objective of Otsuka for this amalgamation is to tap those cancer drugs which are being developed by the biotechnology company of the U.S. This move has been adopted by Otsuka because it would need to increase its revenue sources. Otsuka’s revenue is going to shrink as their patent for Abilify schizophrenia treatment would expire very soon. Thus, the company is seeking newer streams for increasing their revenue.

Due to the expiry of patents, many large pharmaceutical companies faced shrinkage in sources of income. However, the pharmaceutical companies have dealt this situation with tact by acquiring smaller biotech companies. This helped to find access to newer drugs, which in turn helped them increase their revenues. They generally target the firms having cancer therapy drugs, which are quite profitable for making deals. Similar methods are also being followed by the Japanese drug maker Otsuka. The fifth-largest deal in the history of biotechnology firms took place last month when Amgen Inc agreed to buy Onyx Pharmaceuticals Inc by paying $10.4 billion. Deals of lesser value also took place between pharmaceuticals in the recent past with AstraZeneca Plc acquiring private firm Amplimmune for around $500 million.

Cancer is drawing more investment from pharmaceutical and biotech companies that has fueled research and development steps for understanding the genetic basis of cancer in order to develop newer medicines.

Otsuka mentioned on the August 29, that they would launch for Astex, a tender offer within the following 10 days. The price they are likely to quote is $8.50 per share, which is 48% premium on the average closing price of the stock for last 30 days.

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