AstraZeneca PLC said Monday it is buying U.S.-based biotech drugmaker MedImmune Inc. in a US$15.6 billion deal that will allow the British company to enter the vaccines market.
AstraZeneca, which has been looking to strengthen its pipeline of future drugs as it faces patent challenges and escalating generic competition, will pay $58 a share for MedImmune, a 21 percent premium to the stock's close on Friday.
"This acquisition represents a transformational step to deliver our biologics strategy sooner than anticipated," said AstraZeneca Chief Executive David Brennan. "It creates a leading fully integrated biologics and vaccines business with critical mass and enhances AstraZeneca's R&D science base through which we will deliver a stronger product pipeline."
The deal, which AstraZeneca hopes to close in June, will increase the company's proportion of biotechnology drugs in its pipeline from 7 percent to 27 percent, and enlarge its total pipeline by 45 projects to 163 projects.
That includes two late-stage products being developed by Gaithersburg, Maryland-based MedImmune, which has more than 2,500 employees in facilities across the United States, Britain and the Netherlands.
One product is a next-generation follow-on to its flagship childhood respiratory drug Synagis. The second is a refrigerated formulation of its FluMist inhaled influenza vaccine, which will probably be launched in the coming U.S. winter season.
AstraZeneca's decision to enter the vaccines market follows the purchase of U.S. vaccines maker Chiron by Novartis AG last year. AstraZeneca's British rival, GlaxoSmithKline PLC, and Paris-based Sanofi-Aventis SA already have large vaccines business.
Pharmaceutical companies are turning to vaccines as a new growth area because the market has few producers and a reduced risk of generic competition. Interest was spurred on by the emergence of the deadly strain of bird flu in Asia and the resulting realization that there was no vaccine to protect against it.
Brennan said that the bidding process for MedImmune was "ferociously competitive" and that Astra was "delighted to have won against all of our peers in the pharma industry."
MedImmune said earlier this month that it was willing to consider takeover offers, reversing its stand against a sale because of interest from big pharmaceutical companies and investor unhappiness with the company's performance.
The company posted US$1.28 billion (??940 million) in revenue last year, mostly from Synagis, but investors said it had failed to meet some major milestones.
Shareholder concerns centered on the disappointing launch of FluMist four years ago. The drug was predicted to be a blockbuster, but ran into problems with storage, price and limitations on who could use it.
The announcement of the deal with MedImmune led Astra to bring forward its release of its first-quarter results, originally scheduled for Wednesday.
The company reported a 9.5 percent increase in net profit of $1.56 billion. Revenue rose 13 percent to $6.97 billion as the company benefited from the strong dollar while sales at constant exchange rates rose at a slower pace of 9 percent.
Astra said it was still on track for reaching its target earnings per share in 2007 of $3.80 to $4.05, excluding any contribution from U.S. sales of heart drug Toprol-XLTM and restructuring costs.
It said it expects to incur a $250 million charge relating to supply chain restructuring in 2007, about half the total it expects for the restructuring.
AstraZeneca shares fell 1.5 percent to 2,910 pence on the London Stock Exchange.