A sign is seen at an AstraZeneca site in Macclesfield, central England May 19, 2014.Credit: Reuters/Phil Noble
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LONDON (Reuters) - AstraZeneca (AZN.L) took a major step to build up its respiratory medicine business on Wednesday by striking a deal worth up to $2.1 billion for the rights to Spanish group Almirall's (ALM.MC) lung drugs.
The British drugmaker, which resisted a $118 billion takeover attempt by Pfizer (PFE.N) in May, said it would pay an initial $875 million and up to $1.22 billion more if the drugs meet development and sales targets.
The tie-up boosts a key therapeutic area for AstraZeneca, whose Chief Executive Pascal Soriot is determined to show his company has a strong independent future.
Soriot also struck a clinical trial collaboration with Japan's Kyowa Hakko Kirin (4151.T) for a study that will evaluate a combination of the two companies' drugs in cancer - another important field for AstraZeneca.
For Almirall, the deal with AstraZeneca is a notable win, giving it extra resources to increase its focus on dermatology. The company is a local success story whose shares have strongly outperformed the Spanish market in the past three years.
AstraZeneca will have the right to develop and commercialize Almirall's existing lung drugs - including its recently launched treatment Eklira or aclidinium - as well as its pipeline of experimental therapies.
Almirall Sofotec, an Almirall subsidiary focused on making devices for delivering drugs to the lungs, including the Genuair inhaler, will also transfer to AstraZeneca.
Importantly, the deal gives AstraZeneca access to revenues from a drug already on the market, in Eklira, helping its sales immediately as it struggles with a wave of patent expiries on its own blockbuster medicines.
Eklira sales are expected to reach $535 million by 2018, according to consensus forecasts collected by Thomson Reuters, although much of that will be sold via Actavis (ACT.N), which has U.S. rights to the drug after acquiring Almirall's marketing partner Forest Laboratories.
AstraZeneca expects the transaction, which will be paid for from existing cash reserves and using short-term credit facilities, to be neutral to core earnings per share in 2015 and accretive from 2016. It is set to close by the end of 2014 and will not affect AstraZeneca's current year financial outlook.
Mick Cooper, an analyst at Edison Investment Research, said the agreement with Almirall was a "smart deal" that would help build up AstraZeneca's respiratory business, which is already doing well as its Symbicort drug wins business from GlaxoSmithKline's (GSK.L) Advair.
"Its respiratory franchise has considerable momentum at the moment and this agreement fills in the gaps in the portfolio,
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