Takeda has agreed to acquire Cambridge, Massachusetts-based Millennium Pharmaceuticals for $8.8. billion dollars. 

The Wall Street Journal reported on the terms of the deal as follows:

Takeda, Japan’s biggest drug maker by revenue, will buy Millennium. . . . for $25 a share. The price represents a 53% premium to Wednesday’s $16.35 closing price for Millennium shares. The deal, the largest acquisition by Takeda, is structured as a tender offer and is conditional upon a majority of shareholders accepting the terms.

Obviously Millennium came out of this deal quite well: $8.8. billion is certainly not an insignificant amount of money.  In Vivo Blog certainly characterized this as an excellent deal from Millennium’s perspective, explaining as follows:

Millennium hit its billion dollar jack-pot a bit sooner than expected. . . . Not bad for a company with just one marketed product and less than a dozen promising, but still risky, clinical assets. . . .In addition to Velcade, Millennium has 10 drugs currently in clinical trials, primarily focused around oncology and inflammatory bowel disease. But the company’s next most advanced product, MLN-0002, an antibody against the gut-specific alpha-4 beta-7 integrin for ulcerative colitis and Crohn’s disease, has yet to enter Phase III clinical trials and isn’t likely to be approved before 2011 or 2012.

Thus, until the Takeda acquisition announcement, Millennium’s fate–barring some kind of external business transaction–was entirely dependent on expanding the use of its first-in-class proteasome inhibitor beyond its approved uses in relapsed multiple myeloma and mantle cell lymphoma. . . .

Simply put, Takeda’s rich was offer was too good to ignore. Yes, Velcade growth was strong and growing stronger. But unable to in-license or acquire a late stage product on favorable economic terms, the company was forced to rely heavily on the growth of this product to feed its clinical pipeline until MLN-0002 was ready for prime time. A risky situation and one that already seemed as if it were necessitating tough development choices.

So, why was this a good deal from Takeda’s perspective?  Well, as in the case of many pharmaceutical companies, it was all about rebuilding the pipeline.

The Wall Street Journal explained as follows:

By acquiring Millennium, Takeda will help address a revenue problem it will likely face soon. The patents on two of Takeda’s biggest-selling products — ulcer drug Prevacid and diabetes treatment Actos — expire in 2009 and 2011, respectively. Revenue from Millennium’s best-selling product, blood-cancer treatment Velcade, is growing quickly and is expected to reach as much as $345 million this year.

Sales of Velcade could get another big boost this summer when the U.S. Food and Drug Administration rules on an application from Millennium to sell the drug as a first-line treatment for multiple myeloma. Currently, the drug’s labeling indicates it should be used only with patients who have already tried another medicine first. A label allowing for broader usage of the drug would likely result in more patients using Velcade for longer periods of time.

Also, according to The Wall Street Journal, the acquisition is part of a larger strategy by Takeda to expand into overseas markets.  The Wall Street Journal reported as follows:

The acquisition. . . .is part of an aggressive campaign by Takeda President Yasuchika Hasegawa to spend a good chunk of the roughly $20 billion the company has in cash on acquisitions or licensing agreements.Last year, the company set aside $10 billion as part of a strategic fund to help it expand into overseas markets. In February, Takeda struck a deal to buy biotech giant Amgen Inc.’s Japan unit, as well as gain marketing rights to 13 Amgen drugs for Japan and elsewhere in Asia. Last month, it bought out partner Abbott Laboratories’ share of a U.S. joint venture. 

Thus, in the end, the deal was a win-win for both Takeda and Millenium.  

It seems likely that we will be seeing more such acquistions from Takeda in the near future.  Perhaps biotech companies should take note and put Takeda on their short list for potential strategic partners: Takeda may just be in the market for more such relationships.