AstraZeneca Advances $39 Billion Acquisition of Alexion Pharmaceuticals with FTC Clearance

AZ's Largest Acquisition: A Significant Step Forward

1. A Critical Step

Recently, AstraZeneca announced on its official website that the acquisition of Alexion Pharmaceuticals has passed the review by the U.S. Federal Trade Commission (FTC), marking a significant step toward completing the acquisition.

This is the largest acquisition undertaken by AstraZeneca since its formation in 1999 through the merger of two pharmaceutical companies from the United Kingdom and Sweden.

The proposed acquisition, first announced in December 2020, will strengthen the company’s scientific capabilities in immunology by adding Alexion’s innovative complement technology platform and robust pipeline. Rare diseases represent a highly advanced therapeutic area characterized by rapid innovation and significant unmet medical needs. The transaction is still expected to close in the third quarter of 2021, subject to additional global regulatory approvals and approval by shareholders of both companies, with the shareholder vote anticipated on May 11, 2021.

It is understood that, following the successful completion of the acquisition, AstraZeneca will establish a dedicated business unit headquartered in Boston, USA. AstraZeneca will expand its global footprint to cover primary, specialty, and highly specialized care sectors, with projected double-digit revenue growth by 2025.

Currently, there are over 7,000 known rare diseases, yet the FDA has approved treatments for only 5% of them. The global demand in the rare disease sector is projected to grow at a double-digit rate in the coming years.

2. $39 billion merger and acquisition

In December 2020, AstraZeneca announced on its official website homepage that it had reached a final agreement with Alexion Pharmaceuticals regarding the acquisition of Alexion by AstraZeneca, with a total transaction value of $39 billion.

As a major component of the innate immune system in biological evolution, complement, like cytokines, plays a significant role in human physiological and pathological processes. Complement system activation is a primary defense and clearance mechanism against exogenous infectious pathogens, and it also serves as a crucial pathway for the timely removal of necrotic cells and the promotion of tissue repair.

It is understood that Alexion’s business operations are primarily focused on the research, development, and commercialization of orphan drugs for ultra-rare diseases. Aside from Strensiq, used to treat hypophosphatasia, and Kanuma, used to treat lysosomal acid lipase deficiency, its main revenue sources are derived from Soliris, a C5 inhibitory antibody targeting abnormal complement activation, or its second-generation long-acting product, Ultomiris.

Data shows that Alexion demonstrated strong commercialization capabilities in building its “blockbuster” C5 product portfolio. Within less than two years of launch in its key markets, including the United States, Japan, and Germany, more than 70% of patients with paroxysmal nocturnal hemoglobinuria (PNH) successfully transitioned from Soliris to Ultomiris, underscoring the success of this franchise and the robust pipeline of supplemental indications for Ultomiris.

Industry perspectives suggest that AstraZeneca’s acquisition of Alexion can leverage AZ’s strong commercialization capabilities to drive market share for existing approved rare disease indications. Furthermore, AZ’s strengths and scale in immunology have also facilitated the expansion of complement therapies into major disease areas such as cardiovascular diseases, organ transplantation, and autoimmune disorders, thereby promoting drug price reductions and broadening the rare disease drug market.

3. The Rare Disease Market: Large or Small?

According to the "2019 Orphan Drug Report" released by the pharmaceutical research firm Evaluate Pharma, the global orphan drug market size was approximately $131 billion in 2018 and is projected to grow rapidly at a compound annual growth rate (CAGR) of 12.3% from 2019 to 2024, reaching $242 billion by 2024.

According to Thomson Reuters’ research, this figure is even higher: from 2001 to 2010, the global market for orphan drugs grew at a rate of 25.8%, outpacing the growth rate of the non-orphan drug market (20.1%). This indicates that the orphan drug market will continue to expand in the future.

To some extent, rare diseases often face challenges such as difficulty in diagnosis, lack of available treatments post-diagnosis, unapproved therapies or those without indicated uses for rare diseases, high-cost medications not covered by insurance despite being on the market, and difficulties in prescribing these drugs. Therefore, the accessibility of rare disease medications has always been a significant challenge for patients and related institutions.

Meanwhile, pharmaceutical companies specializing in rare diseases face the challenge of an overly small patient population, where drug sales struggle to offset upfront R&D and production costs, thereby diminishing their incentive to enter this field. There are few global leaders in rare disease drug manufacturing, and relevant products are rarely launched in the Chinese market.

Notably, the orphan drug designation and approval of indications can drive the expansion of orphan drugs into common disease indications. For instance, in the United States, the orphan drug market has grown rapidly over the past two decades, with sales from non-orphan indications far exceeding those from orphan indications, thereby imposing higher demands on the commercialization capabilities of orphan drug companies.

As AstraZeneca expands its product portfolio, its strategic push into the rare disease market is gradually yielding results. The company’s sales and commercialization capabilities may inject new vitality and create fresh opportunities for further expansion of the rare disease drug market.