While 2020 already had its fair share of mergers and acquisitions despite everything that’s happened so far this year, it seems that one more major deal has been announced in 2020. British pharmaceutical giant AstraZeneca (NYSE: AZN) announced over the weekend that it agreed to buy out the U.S. based rare disease drug developer Alexion Pharmaceuticals (NASDAQ: ALXN) for around $39 billion in cash and stock.
AstraZeneca, which is also working on a late-stage COVID-19 vaccine that’s currently lagging behind some of the other developers out there, has decided to move into the rare disease drug market in an effort to bolster its cash flow. Although AstraZeneca has been known as a big player in the cancer-drug market, its revenues have been falling as its previous blockbuster drugs are seeing their patents expire, which leads to the emergence of generic competitors. While that’s good for patients, it’s bad news for AstraZeneca, which is looking to diversify its revenue to other markets.
The majority of Alexion’s revenue, which came in at around $6 billion over the past 12 months, came from Solaris sales, a drug that treats a variety of rare blood disorders. A couple of years ago, Solaris was considered the most expensive drug in the U.S. and still is one of the top costing treatments out there right now, coming in at around $500,000 for a year’s supply. While there aren’t many people who need the treatment, its hefty price tag means that Alexion can make a lot of money from this particular drug.
“Alexion has established itself as a leader in complement biology, bringing life-changing benefits to patients with rare diseases. This acquisition allows us to enhance our presence in immunology,” said AstraZeneca CEO Pascal Soriot. “We look forward to welcoming our new colleagues at Alexion so that we can together build on our combined expertise in immunology and precision medicines to drive innovation that delivers life-changing medicines for more patients.”
Senior members of both companies have already approved the deal, and is expected to take place sometime in the second half of 2021. AstraZeneca’s CFO went on to add that the company doesn’t expect to make any more big purchases for quite a while following this Alexion acquisition.
Shares of AstraZeneca are trading down 5.7% in pre-market trading right now in response to the news. This is typical when it comes to companies that are doing the acquiring, as forking out tens of billions is seen as a major, but risky investment, especially considering everything going on with the coronavirus right now. On the other hand, Alexion’s stock is expected to jump on Monday once the markets open up for trading.
Alexion Pharmaceuticals Company Profile
Alexion Pharmaceuticals specializes in developing and marketing drugs for rare, life-threatening medical conditions. Its blockbuster product, Soliris, is approved for paroxysmal nocturnal hemoglobinuria (PNH), atypical hemolytic uremic syndrome (aHUS), generalized myasthenia gravis (gMG), and neuromyelitis optica spectrum disorder (NMOSD). Next-generation Ultomiris is approved in PNH and aHUS. Strensiq and Kanuma target ultrarare metabolic diseases. Alexion’s pipeline targets rare diseases with high unmet need in hematology, nephrology, metabolic diseases, neurology, cardiology, and other areas. – Warrior Trading News
