Buying MGI Pharma for about $3.9 billion to build an oncology arm (2007)

Growth bought, and growth grown

At the heart of this acquisition was a choice to spend money on time: facing the patent cliff created by the success of a single drug, Aricept, Eisai bought its way into a growth field, cancer, and into the American market. In an area where in-house research takes many years to bear fruit, it chose instead to swallow whole a company that already had products and a sales channel. A judgement that was willing to blow away a full year’s profit with an $845.8M (¥87bn) one-time charge in order to get ahead betrays both the depth of the anxiety about patent expiry and the gambler’s streak in president Naito Haruo.

Yet it cannot be said that the oncology business obtained by acquisition went on to carry Eisai’s growth by itself. The company’s later expansion appears to owe more to the anticancer drug it created in its own laboratories and to the new drug in the dementia field it had funded for so long. The MGI Pharma deal thickened the foundations of the US business; whether the fruit it bore matched the sum invested, and where, is a question measured not at the entry point of a single loss-making year but across the widening shape of the business that followed.