Novartis to buy Swiss biotech company Speedel for $880 million

Swiss drugmaker Novartis plans to acquiring a majority stake in its research partner, Swiss biotech company Speedel for about $880 million to speed up development of potential blockbuster blood-pressure drug Tekturna, it said on Thursday. The drug, known as Rasilez in Europe, is the first Speedel drug to reach the market and was co-developed with Novartis.

Joseph JimenezNovartis has a long standing long-relationship with Speedel, starting by providing financial support that led to its creation in 1998 and development of Tekturnand rights to early-stage development of Tekturna/Rasilez (aliskiren), which were reacquirred in 2002. Novartis conducted Phase III trials that led to US and European approvals in 2007 as the first new type of high blood pressure medicine - known as direct renin inhibitors - in more than a decade.

The swiss giant already holds a stake in Speedel and offered to buy the remaining at 130 francs a share, a whopping 94 per cent premium on Monday's closing price. Expectedly, Speedel shares surged on this announcement and now stand close to the offer price. Before this, the stock had lost 40 per cent of its value in the last six months.

Big European drugmakers have been buying out smaller biotechnology firms in order to secure their profitability, improve their pipelines of drugs under development or testing and fight back competition from generic drugmakers when their patents expire. On average, similar deals had happened on 63 per cent premiums to prevailing market prices.

Indianapolis-bases Eli Lilly, which sells antidepressant Prozac, said Wednesday that it would spend $64.0 million to acquire SGX Pharmaceuticals and expand its biotechnology footprint. Last week British drugmaker Shire secured the acquisition of competitor Jerini, a specialist in treating rare diseases.( See: American drugmaker Eli Lilly buys biotech company SGX Pharma for $64 million)

In a first step, Novartis raised its stake in Speedel by 51.7 per cent to 61.4 per cent  through a series of off-exchange transactions from major shareholders, including 21.5 per cent from Speedel CEO Alice Huxley, for 130 Swiss francs per share in cash.