Takeda and Abbott come to end of 31-year road

Marriages of convenience are not normally known for their longevity, but after 31 years of being together Takeda and Abbott Laboratories are calling it a day and finally going their own separate ways.

Yesterday, the two companies confirmed that they would be unwinding their joint collaboration TAP Pharmaceutical Products, after rumours had swept the market about the split. An agreement to “evenly divide” the business will see Abbott walk away with Lupron, the prostate cancer drug that last year had sales of $645m and Takeda get back the rights to anti-acid drug Prevacid for $1.5bn, to be paid to Abbott over a period of five years.

The two will also divide the sales of products in TAP’s pipeline, which include febuxostat, a phase III treatment for gout and TAK-390MR, the follow-on for Prevacid.

Timing is everything

It appears to be little coincidence that the deal has been struck close to Prevacid losing patent protection in 2009 and rival proton pump inhibitor Protonix already succumbing to generic competition, making the product less attractive to Abbott, which received a 50% split of sales. Last year Prevacid had revenues of $2.47bn, a figure that is set to drop to $165m by 2012 according to consensus forecasts from EvaluatePharma.

Despite the Japanese group’s eagerness for several years to unwind the 70s alliance that was designed to give it as originator of both Lupron and Prevacid a route in to the US market, the stumbling block had always been price. With the value of the collaboration set to fall alongside Prevacid sales, the decision has been made a lot easier.

The relative lack of success of the collaboration, yielding only two marketed products, has also facilitated the split, and many had started to see the TAP collaboration as a distraction for Abbott.

Alongside Prevacid and Lupron, the TAP pipeline can only boast TAK-390MR, which is up before the regulators in October, and febuxostat, which could face competition from Savient’s Puricase and is forecast to have relatively modest sales of $244m by 2012.

Earlier stage products include a phase I selective androgen receptor modulator bought in from Ligand and phase II proton pump inhibitor ilaprazole.

Single benefits

While both groups gain from going it alone, Abbott appears to have got off slightly better in the settlement. The US group not only gets sole rights to marketed cancer treatment Lupron, which has patent protection till 2015, but can also use it to kick start its oncology division.

The sales force that will be transferred along with Lupron will also be mobilised to sell ABT-751, currently in phase II, and the rest of Abbott's oncology pipeline. 

Abbott is also in line for royalties on everything else in the TAP pipeline that Takeda will now develop, meaning that they reap the rewards if TAK-390MR is successful, if it is not Takeda will be left to bear the brunt of the losses.

TAK-390MR, a new chemical entity using modified release technology, is forecast to have sale of $1.1bn by 2012, although some believe that prediction to be rather bullish.

Takeda will also reap the benefits of being single. The US drug market is more attractive than the group’s home market, where drug prices are hit with government agreed cuts every two years.

Peace of mind

But perhaps the biggest benefit to both groups will be peace of mind. The two have not been the easiest of bedfellows and have publicly rowed over the running of the company.

Eventual disagreements over strategy saw Takeda start its own US operation 10 years ago, after Takeda and Abbott ended an agreement that would have allowed TAP to sell diabetes treatment Actos and other drugs in the US.

The venture has also been marked by litigation. In 2001 TAP settled a court case brought by the Justice Department for $875m after it pleaded guilty to illegally marketing and manipulating the costs of Lupron.

So it looks like this will be a parting that causes little regret on either side.

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