HONG KONG – China's Luye Pharma Group Ltd. acquired the rights of Astrazeneca plc's antipsychotics Seroquel (quetiapine fumarate) and Seroquel XR. The transaction, which will allow Luye to manufacture the drugs and market them in 51 countries and regions, is a win-win, helping Luye tap into the global market while Astrazeneca seeks to spin off products that are no longer part of its core business.

Under the agreement, Luye will pay Astrazeneca $546 million in total by installment for a package including the manufacturing know-how, marketing authorizations, regulatory information, electronic materials for commercialization, certain patents of Seroquel and Seroquel XR, as well as the license of the antipsychotics in 51 markets such as China, Brazil, Australia, Mexico, South Korea and the U.K.

"This collaboration enables us to deep dive in the current major international markets while [we] enter more emerging markets that are new to us," Sammy Jiang, vice president of strategy and business development at Luye Pharma, told BioWorld Asia. "We plan to get all the licenses needed in the 51 markets and have manufacturing know-how transferred in three years."

Astrazeneca will receive an up-front payment of $260 million followed by two installments, as well as an extra $8 million after the company has transferred its manufacturing know-how to Luye and Luye is able to sell Seroquel XR in China.

Seroquel and Seroquel XR are atypical antipsychotic medicines with antidepressant properties. Seroquel is indicated for schizophrenia and bipolar disorder, while Seroquel XR is used to treat major depressive disorder and generalized anxiety disorder.

The central nervous system (CNS) is one of Luye's focus areas. The Chinese drugmaker has in its pipeline LY-03004 to treat schizophrenia and bipolar disorder, LY-03003 for Parkinson's disease and LY-03005 for depression. The addition of Seroquel and Seroquel XR will further enrich its CNS product portfolio.

"As [sales of] Seroquel and Seroquel XR are already established, we can make use of the existing channels for commercialization. They are branded products with well-established product lines," said Jiang. "The manufacturing know-how will be transferred to China, which can strengthen our manufacturing capability and put us on a par with other global players."

In 2009 and 2017, China included Seroquel and Seroquel XR in its category B of the national health insurance drug list, respectively.

"The drugs have vast potentials in China with a big patient base. Last year, the CNS market saw an average growth of 10 percent, while Seroquel alone saw a 17 percent increase," said Jiang.

"We expect Seroquel to see robust sales growth in China in the next three to five years," she added. "Last year, our CNS products contributed 13 percent to our total revenue. With Seroquel and Seroquel XR, we expect to see a growth to 30 percent in the CNS sector."

Meanwhile, Astrazeneca can cash out from Seroquel and Seroquel XR, drugs that are no longer its priorities. Instead, the pharma giant will focus on oncology, respiratory, cardiovascular, renal and metabolic diseases.

"The agreement with Luye Pharma is in line with Astrazeneca's strategy to focus on three main therapy areas while maximizing the value from our legacy medicines like Seroquel," said Mark Mallon, executive vice president of global product and portfolio strategy at Astrazeneca. "The agreement with Luye will also ensure continued widespread patient access to important established medicines."

Jiang echoed Mallon's view. "The price was not a major concern for Astrazeneca. They are more strategic-minded and consider more the future prospects of the products. The agreement with Luye is in line with their strategy to focus on three major therapeutic areas that do not include CNS," she said.

Astrazeneca may have sold off the two antipsychotics at a right time. Seroquel has lost its compound patent protection globally in 2012, and Seroquel XR formulation patents have also expired in most markets in 2017.

The two brought in only $148 million last year in the markets covered in the agreement with Luye. Back in 2009, Seroquel alone generated $4.9 billion worldwide for Astrazeneca, representing 15 percent of the company's total revenue. But it also caused losses for the pharma company as it was involved in numerous lawsuits related to an increased risk of diabetes in the U.S. The drugmaker had to pay $198 million to settle around 17,500 injury claims in 2010.

In face of the potential claims, Jiang said her company had taken into consideration such risks.

"The 51 markets were carefully selected by us," said Jiang.

Jiang added that the agreement with Astrazeneca has already opened the door to more potential multinational collaborations for Luye, which might bring in two more similar deals this year.

"We have been aiming to go global, and this deal with Astrazeneca helps us enlarge our global market penetration," she said.

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