Daiichi Sankyo Divests U.S. Rights to 8 Cardiovascular Drugs, Sharply Focusing on Oncology Portfolio

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Recently, Daiichi Sankyo announced that it has sold the U.S. rights to eight cardiovascular drugs to Cosette Pharmaceuticals, Inc., based in New Jersey. This move is part of Daiichi Sankyo's five-year mid-term strategy, which aims to transform the company’s structure into one primarily focused on patented drugs, with an emphasis on its oncology investment portfolio. The vision is to become a global top 10 leader in oncology by 2030.

Cosette Pharma is a dermatological products manufacturer equipped with high-quality production facilities capable of manufacturing various pharmaceutical dosage forms such as suppositories, creams, ointments, liquids, and gels. It has an active R&D pipeline in the field of dermatology and allergy treatment. Currently, the company is preparing to move towards diversification. The U.S. sales and distribution rights of the eight cardiovascular drugs acquired this time will become the launch platform for its future portfolio expansion and growth.

Cosette was founded in 2018 when Avista Capital Partners (Avista), a private equity firm focused on growth-oriented healthcare businesses, acquired G&W Dermatology, the dermatology division of G&W Labs, and established Cosette. The company manufactures dermatological products at its facilities in Lincolnton, North Carolina, and South Plainfield, New Jersey. Currently, Cosette has a portfolio of over 45 products, most of which are generic topical dermatological therapies.

Cosette CEO Apurva Saraf said in an interview, "This is a transformative move that splits the company's business into two distinct areas."

In this transaction, the brand drugs acquired by Cosette are aging and facing competition from generic drugs. The most notable ones include the former blockbuster Benicar (a beta-blocker antihypertensive drug) and Welchol (a cholesterol-lowering drug). Others include Azor, Tribenzor, and Effient, all of which were approved for marketing over a decade ago. According to IQVIA data, in the 12 months ending November 2021, the sales revenue of these eight drugs acquired by Cosette in the U.S. market amounted to $123 million.

During the 30-month transition period, Daiichi-Sankyo will transfer the product's manufacturing, supply, and commercialization to Cosette. Apurva Saraf stated, "We will strengthen our commercial team as this is a new business line. We will recruit personnel at all levels within the next six months to enhance the integration of this business into our organization."

Daiichi Sankyo, Japan's second-largest pharmaceutical company, is divesting some of its assets as it sees more lucrative opportunities in developing cancer treatments.

Daiichi Sankyo CEO Ken Keller noted in a press release: "As part of our vision to become one of the top ten oncology leaders globally by 2030, we are transforming our structure to focus on our oncology portfolio in the United States while ensuring that these legacy medicines continue to be available to the patients who rely on them."

Before losing patent protection in 2016, Benicar's sales reached $2.6 billion, accounting for nearly a quarter of Daiichi Sankyo's revenue. In 2017, Daiichi Sankyo agreed to pay $300 million to resolve 2,300 lawsuits involving gastrointestinal side effects from its cardiovascular drugs, including Benicar, Azor, and Tribenzor.

Daiichi Sankyo's move is similar to AstraZeneca's action two months ago. At that time, AstraZeneca sold the well-established respiratory drugs Eklira and Duaklir to Covis Pharma for $270 million. As early as 2018, the two companies had reached another agreement, under which AstraZeneca sold three well-established drugs to Covis Pharma.

For Cosette, taking over Daiichi Sankyo's eight cardiovascular drugs deal will become a springboard for its inward and outward business expansion. Apurva Saraf stated: "This transaction provides us with a commercial platform, a footprint, which now allows us to build upon these assets to acquire more complex products with a similar portfolio. Our plan is not simply to acquire established products. The next phase will be new products that are patented and commercially viable."

Reference: Daiichi Sankyo relinquishes rights to 8 cardio drugs to Cosette