Strategic portfolio Management : Acquiring clinical stage company

In pharmaceutical strategic management, objective for any company is to have evolving R&D pipeline. So, one of the common strategy bigger pharmaceutical or bio pharmaceutical companies adopts to enhance product pipeline by acquiring clinical stage company. 

Lets take recent case study where Otsuka Pharmaceutical Co., Ltd. has agreed to acquire Neurovance, a privately held, venture-funded, clinical stage pharmaceutical company focused on attention-deficit hyperactivity disorder (ADHD) and related disorders.

Under the terms of the agreement, Otsuka America, Inc., a subsidiary of Otsuka Pharmaceutical Co., is to provide an estimated USD $100 million in upfront payments at closing, up to $150 million in additional payments contingent on achievement of development and approval milestones, and future additional payments contingent on achievement of sales milestones.

The acquisition of Neurovance is an extension to ADHD of Otsuka’s strategy in the CNS therapy area to develop new products that can also address issues of importance to patients such as compliance with medicine taking or the challenging side effects from existing medications. Centanafadine is a non-stimulant drug candidate which in its development to date has shown that it may achieve comparable efficacy to stimulant drugs with a potentially lower risk of abuse.