Buying Sepracor for about $2.6bn to own a US sales network (2009)

The structure of betting on a single drug

At the heart of this decision is a mid-tier maker with one promising drug choosing to sell it out in the United States itself rather than entrust it to a major’s distribution. Buying an entire company for its field force was a coherent route to maximising the value of a single compound, lurasidone. Coming at the same moment as Takeda’s purchase of Millennium and Daiichi Sankyo’s of Ranbaxy, this deal took a different road to scale from the top tier — expansion staked on one product.

But securing the channel first and pushing a single drug through it was inseparable from dependence on that drug. While Latuda’s success retrospectively justified one North American acquisition after another, the concentration of earnings in one product quietly deepened. As the expiry of US exclusivity approached, that dependence rose as the next heavy problem. The 2009 decision to own a channel in America was the opening move of expansion and, at the same time, the first sign of the concentration risk that came later.