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Novartis (NVS) picked up dry-eye drug Xiidra from Japanese pharmaceutical company Takeda (TKPHF) for $3.4 billion in cash plus milestone payments of up to $1.9 billion.

The Swiss pharma giant announced Wednesday it also will obtain 400 Takeda employees associated with the drug. 

Xiidra, a potentially blockbuster drug, was acquired when Takeda purchased Shire PLC. Takeda CEO Christophe Weber had said the company was looking to reduce debt following the company's purchase of Shire.

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Xiidra will compete with Allergan's (AGN) popular Restasis eye-drops. Xiidra made about $400 million in sales last year, Novartis
said. The drug could bring in as much as  $1.4 billion, according to Elizabeth Krutoholow, a Bloomberg Intelligence analyst.

Pharma analyst Sam Fazeli said, however, that "ignoring $1.9 billion of future sales milestones, cash of $3.4 billion values Takeda's dry-eye drug Xiidra at 8.5x 2018 sales, which is a big price tag, given market dynamics."

Novartis was trading at $80.91, down .17%. The stock has a 3.5% dividend yield, price target of $88.40 and consensuses rating of overweight, according to FactSet.

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