Takeda’s strategic offloading of blockbuster-to-be Xiidra to Novartis will cut debt

Following the news that Takeda has agreed to sell dry eye drug Xiidra to Novartis for $3.4bn, Maura Musciacco, Senior Director of Neurology & Ophthalmology at GlobalData, a leading data and analytics company, offers her view:

“Now that Takeda has completed the acquisition of Shire, it comes as no surprise that the Japanese pharma company has divested Xiidra to Novartis in an effort to cut debt. Given that Takeda did not have a presence in ophthalmology prior to the Shire acquisition, Shire’s Xiidra would have represented a new market for Takeda, but also a market that does not fit with its current competencies or strategy.

“Xiidra was Shire’s sole ophthalmology drug currently on the market, however, given its solid presence in the dry eye market, it is expected to reach blockbuster status by 2022 and generate $1.2bn in sales in 2025, according to GlobalData. Following the Takeda-Shire deal last year, Takeda stated that it planned to reduce debt by divesting up to $10bn in non-core assets, as such, we can expect Takeda to shed more products in the near future.

“When the Takeda-Shire deal was first announced in April 2018, there were some concerns that Takeda may not have been able to afford this purchase, as it had only $4.3bn in cash at hand, and the deal could have over-stretched its finances. As a result, Takeda had to take on a significant amount of debt to afford its pricy takeover of Shire, and rumors of potential divestments were immediate, seeing Shire’s ophthalmology portfolio as a good candidate for this.”

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