AstraZeneca has become quite successful locally, but now they are trying to expand in China. They acquire Chinese rights to Ironwood Pharmaceuticals Linzess. A widely sought after product in China, so obtaining the rights for it does help the company to expand into a new market.
A lot of people consider Linzess to be the prized possession of Ironwood, and it continues to shine and grow incredibly. AstraZeneca has the Japanese rights receiving $13 million in sales and now is focusing on where Linzess can make a difference. By bringing in Linzess to China, the deals can be even better. Some say that there are around 14 million people with IBS, and that means it will be a vital market to grow with and which will undoubtedly expand quite a bit.
AstraZeneca has a lot of experience and know-how when it comes to dealing with this type of product, and it also knows how to offer very high-quality medical products. China is around 20% of the company’s sales of $5.72 billion. So the growth is coming from that area, and it will undoubtedly continue to expand again and again.
The company will have to pay three non-contingent payments that will have a total of $35 million to Ironwood. The price is not that high considering what AstraZeneca can bring in from its Chinese exposure. They will have to pay all of that between 2021 and 2024, so the deal will still take a little bit of time to work out. Once the payments are made, Ironwood will not have any share in the sales profit or anything like that. The company will not be a part of the joint fund development for the product either.
Ironwood might be able to receive up to $90 million in total in milestone payments if specific sales targets are achieved. So this is quite an interesting approach that might end up being very fulfilling for them. Still, AstraZeneca is playing the long term here, and they are trying to bring in this product to as many countries as possible.
China is an obvious choice for them as there are millions and millions of people that need Linzess, so it makes sense to try and expand there. But on top of that, the company does operate in around 100 countries, and it’s always deciding to invest in new markets and new products that will help patients. At this point, it seems to work very well, and the payoff might be great in the long run.
What we do know is that AstraZeneca is going to become more and more focused on offering China its products, and the Linzess market approach will pay off for them in the long run. Was it necessary for AstraZeneca? Yes, because they will break a market that can reach millions.
A biotechnology and sci fi nerd, that enjoys writing about new innovations within the science world and industry.