May 7, 2024

Ono Pharmaceutical's Strategic Acquisition: A Decisive Step Towards Sustainable Growth and Market Leadership

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The company has announced its intention to make its largest acquisition yet, investing $2.4 billion. Its cancer immunology drug, Opdivo, has been a critical factor in driving its performance growth, but its patent will expire in stages beginning in 2028. The company is now focused on developing new drug candidates more rapidly than its competitors, particularly in oncology, to prepare for the impending "patent cliff.”

On April 30th, the company announced its plan to acquire all shares of Deciphera Pharmaceuticals, Inc., a US biopharmaceutical company listed on Nasdaq, through a Tender Offer by September 2024.

"The acquisition will pay off when Opdivo's patents expire and sales decline," said Gyo Sagara, chairperson of Ono Pharmaceutical, at a briefing held on the same day."

Decifera was established in 2003. The company sells an anticancer drug called Kinlock in the United States and Europe. This drug works by inhibiting an enzyme necessary for the growth of cancer cells. The drug is predicted to reach its highest sales peak at $350 million to $400 million.

The company's robust pipeline boasts several promising drug candidates. Currently, it is in the final stages of clinical trials for a medication that can treat benign joint tumors in the US and Europe. The company aims to submit the drug for approval in 2024, with anticipated annual sales reaching up to $700 million at its peak. Moreover, the company is developing a drug called "President" to address complications related to blood cancer treatment.

Ono Pharmaceutical is taking a proactive stance in the face of Opdivo's patent expiration, one of its essential drugs. The company is actively developing a robust business strategy to tackle this challenge head-on, demonstrating its commitment to maintaining its market position. To counter the anticipated decrease in sales following Opdivo's patent expiry, the company plans to introduce a new drug, Deciphera. While Ono Pharmaceutical is actively working on approximately ten drug candidates, including an anticancer drug called 'Belexible,' it acknowledges that it will take some time to bring them to market.

This acquisition is projected to boost sales significantly in Europe and the United States, effectively addressing a critical business concern.

"When Opdivo was launched in 2014, Ono Pharmaceutical did not have enough sales network to support its commercialization. Ono Pharmaceutical outsources its overseas sales to Bristol-Myers Squibb, and in 2022, BMS had Opdivo sales of more than 1 trillion yen. However, Ono Pharmaceutical received only 89.6 billion yen as royalty in the fiscal year 2022.

Ono Pharmaceutical plans to enlarge its development and sales center on the East Coast of the United States to accommodate 170 people. The company also intends to establish a new hub in Europe. Ono Pharmaceutical is collaborating with Decifera to expedite its sales structure development.