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Roche Holding to Buy Biotech Firm InterMune for $8.3 Billion

Swiss drug maker Roche Holding has agreed to buy the United States biotech firm InterMune Inc. for $8.3 billion, marking the latest multi-billion dollar...

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|Aug 25|magazine6 min read

Swiss drug maker Roche Holding has agreed to buy the United States biotech firm InterMune Inc. for $8.3 billion, marking the latest multi-billion dollar deal in a consolidating pharmaceutical sector.

On Sunday, Aug. 24, Roche announced that it would pay $74 a share through an offer for the California-based company, representing a premium of 38 percent to the closing price on Aug. 22.

The acquisition is the largest by Roche since 2009, Reuters reported, when it purchased the remaining stake it did not already own in U.S. group Genentech for approximately $47 billion.

Healthcare mergers and acquisitions are occurring at a record pace. Thompson Reuters data shows year-to-date activity topping $346 billion, compared to $212 billion last year.

About $87 billion in pharmaceutical acquisitions were made in the first half of 2014, eclipsing the total for all of 2013, according to Evaluate, a research company.

InterMune has one product currently on the market: pirfenidone, a drug meant to treat idiopathic pulmonary fibrosis. Sold in Europe and Canada under the name Esbriet, the drug could receive approval in the United States by Nov. 23.

“We are obviously focused on high unmet medical needs and looking for medicines that make a significant difference clinically, and this clearly fits that bill,” Daniel O’Day, who runs Roche’s pharmaceutical business, told the New York Times.

“For us at Roche, this transaction is a good example of a value-creating bolt-on acquisition; we focus on targeted acquisitions that really compliment our portfolio (...) rather than trying to diversify or going into mega mergers,” Chief Executive Severin Schwan of Roche told Reuters.

The deal is a further step by Roche to diversify away from its reliance on cancer drugs by expanding into other disease areas such as respiratory medicine. Roche currently markets Pulmozyme for cystic fibrosis and Xolair for severe asthma. Other experimental respiratory drugs are in clinical development.

If approved, Esbriet will not have the market to itself for long as Beohringer Ingelheim of Germany has also applied for approval of a drug called nintedanib, according to the Times. Both drugs slow the decline in lung function and evidence from clinical trials indicates that pirfenidone can also help patients live longer.

Roche expects to launch pirfenidone in the United States this year upon approval from the FDA.

Citi is acting as financial adviser to Roche, while Centerview Partners and Goldman Sachs are acting for InterMune.