February 26, 2024

AstraZeneca has struck a deal to buy a Chinese cancer therapy company for up to $1.2bn (£950m) as Britain’s biggest drugmaker expands its footprint in its second biggest market.

The Anglo-Swedish pharmaceutical firm announced on Tuesday it will acquire Gracell Biotechnologies, which is focused on a type of cancer therapy known as CAR-T that alters a patient’s cells to fight the disease.

The deal marks a further investment in cancer research and treatment, which accounts for about one-third of AstraZeneca’s business, as well as its continued effort to expand in China.

AstraZeneca, which is one of the largest stock market-listed companies in London, made 13% of its revenue – about $6 billion of $44 billion – in the country last year, making it the second most profitable market behind the US, where revenue totaled $18 billion amount to.

China’s growing importance to the drug giant was underlined this summer when it emerged that AstraZeneca was considering spinning off its local business and listing it in Hong Kong or Shanghai, to avoid being caught up in the fallout from increasing tension between China and the US and its allies. A spokesman at the time declined to comment on speculation.

The company is not only trying to tap into a growing customer base in China, but is increasingly striking deals with local firms that can expand its drug offerings in other markets.

Its acquisition of Gracell is AstraZeneca’s second tie-up with a Chinese firm in two months, after it struck a deal to develop a weight-loss pill with Chinese biotech firm Eccogene in November.

He paid $2 a share for Gracell, which marks a 62% premium to its closing price on the Nasdaq stock exchange in the US on Friday. The company will operate as a wholly-owned subsidiary of AstraZeneca, with operations in China and the US.

The deal could be worth as much as $1.2 billion if certain regulatory milestones are met, which would trigger additional share purchases.

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AstraZeneca said in a statement that Gracell’s technology will complement the company’s existing work in cell therapy and is an “opportunity to provide a potential best-in-class treatment to patients living with blood cancer through a differentiated manufacturing process to use, as well as to investigate the potential for cell therapy to restore the immune response in autoimmune diseases”.

AstraZeneca became a household name during the pandemic as it developed a Covid vaccine in collaboration with Oxford University. It agreed its first acquisition of a vaccine company earlier this month, buy the Seattle-based Icosavax for $1.1 billion.

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