Each week, "The Pink Sheet" presents commentary on some of the week's most interesting business deals, contributed by the editors of the In Vivo blog. Visit the blog at http://invivoblog.blogspot.com/.

Daiichi Sankyo/Ranbaxy: On June 11, Daiichi announced it had agreed to buy a 34.8 percent stake in Ranbaxy from the Indian company's founders, the Singh family. The company will finance the acquisition - priced at a handsome 31 percent premium to Ranbaxy's closing price June 10 - with a combination of cash and financing. Analysts reckon the combined company will be worth about $30 billion and called the transaction "bold and entirely out of character."

Unlike Japanese brethren Takeda and Eisai, which have inked their own multi-billion dollar transactions in recent months to increase R&D capabilities and a U.S. presence, Daiichi chose to invest in a company focused primarily on generics and geographically situated in a very important emerging market. The deal could also give Daiichi an important leg-up in its home generics business. According to an article published on in-Pharma Technologist's Web site, Alan Thomas, IMS Japan's global account director, said that compared with the rest of the world, Japan has an extremely high proportion of brands that have come off patent - 41 percent - but an extremely low generic penetration on the market - at only 3.4 percent. And Japan's generics industry is expanding at an annual rate of nearly 9 percent. That may seem like small potatoes, but it's currently the fastest growing segment of that country's drug business.

It seems like there are now two clear schools of thought in pharma, those pursuing a focused approach (Bristol-Myers Squibb and Takeda have both made important moves in this direction) and those pursuing a diversified strategy - Novartis and now Daiichi. Perhaps Pfizer is interested in jumping on the diversified bandwagon? The Business Standard reported late Thursday that Pfizer may bid for the 65 percent non-promoter stake in Ranbaxy.

UCB/Otsuka Pharmaceuticals: Daiichi wasn't the only Japanese pharma gunning for a deal this week. The smaller company Otsuka Pharmaceuticals teamed up with UCB to co-promote the Belgian firm's anti-epileptic drug Keppra and the anti-TNF alpha drug Cimzia for the treatment of Crohn's Disease. UCB and Otsuka will also co-develop and co-promote both medicines in other indications, while UCB will join Otsuka in co-promoting the anti-platelet agent Pletaal to selected accounts for a limited period.

Deal terms were definitely on the small side: UCB receives up-front and milestone payments of up to $113 million, as well as funding for clinical development. Contrast that with Takeda's February deal with Amgen, where the deep-pocketed pharma paid out $300 million up-front, or the company's early April deal with Cell Genesys worth $50 million up-front and likely a great deal more for a Phase III immunotherapy product.

Genentech/Symphogen: Danish polyclonal antibody player Symphogen said on June 10 that it was collaborating with Genentech in the infectious disease space. The three-undisclosed-target deal has a total potential value of $330 million inclusive of an upfront payment, equity investment and milestones, and grants Genentech worldwide exclusive license to any candidates. This is the first external demonstration of Genentech's stated commitment to developing large molecules against infectious diseases and Symphogen's third deal, but by far the biggest validation of its Symplex and Sympress technologies.

Janssen/Astex: Johnson & Johnson's Janssen Pharmaceutica is taking a license to Astex Therapeutics' novel fibroblast growth factor receptor (FGFR) inhibitor program and is starting new discovery programs on two additional drug targets. The deal, announced Monday, sees Janssen paying $37 million in up-front, cash and equity payments and research funding to Astex as well as potential milestones and royalties. Janssen's Ortho Biotech arm is responsible for all preclinical and clinical development on all three programs. Astex retains an option to co-commercialize any FGFR projects in the U.S. Astex CEO Harren Jhoti told "The Pink Sheet" DAILY that the lead FGFR program is only at the lead optimization stage, but given the strong interest in the program - which, he says, is highly specific and should therefore avoid side effects that have hindered other firms' efforts - "we were able to command pretty significant financials."

Daiichi Gets Into Generics With Stake In Ranbaxy

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