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Eisai acquires MGI Pharma for USD 3.9bn

Eisai will buy US-based biotech MGI Pharma for USD 3.9bn in cash, in an effort to bolster its cancer drug business

Japan-headquartered Eisai has revealed it will buy US-based biotech MGI Pharma for USD 3.9bn in cash, in an effort to bolster its cancer drug business.

MGI Pharma is being acquired for USD 41 a share, a 23 per cent premium to its closing price of USD 33.45 on 7 December 2007.

With a focus on cancer, MGI Pharma has three marketed products: Dacogen (decitabine) for myelodysplastic syndrome; Gliadel wafers (polifeprosan 20 with carmustine implant) for the treatment of brain cancers; and the injectable, chemotherapy anti-nausea drug Aloxi (palonosetron).

Eisai's best-selling drug is the Alzheimer's disease product Aricept (donepezil), but like other companies it is facing declining revenues as patents for key products are due to run out by 2010. By acquiring a biotech, Eisai should be able to add novel products to its flagging pipeline.

According to media reports, Eisai will absorb MGI Pharma into its existing US-based oncology business. In 2006, Eisai bought four cancer drugs from Ligand Pharmaceuticals for a total of USD 205m, while in early 2007 the company spent USD 325m on the buy up of Morphotek.

Eisai expects the acquisition of MGI Pharma to complete in Q1 2008. It added that the transaction should be accretive to cash earnings per share in FY08, as well as GAAP earnings in FY09.

Eisai is a mid-sized pharmaceutical company, compared with giants such as Pfizer and GlaxoSmithKline (GSK). It has escaped the confines of the Japanese pharmaceutical market and now has multinational operations.

10th December 2007

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