Astellas sees cancer drugs as new pillar, open to M&A

The headquarters of Japanese pharmaceutical company Astellas Pharma Inc. is seen in Tokyo July 17, 2009.

TOKYO (Reuters) - Astellas Pharma (4503.T), Japan's No.2 drugmaker, expects cancer drugs to become an additional profit pillar by March 2020 and is open to further acquisitions in Japan and overseas as it looks to strengthen its drug pipeline, its chief executive said on Wednesday.

Astellas last year bought U.S. biotech OSI Pharmaceuticals for $4 billion to boost its nascent cancer business, giving it the license for lung cancer drug Tarceva and several drug candidates.

"We expect to see cancer drugs join transplantation, immunization and urology as an equivalent profit pillar," Chief Executive Yoshihiko Hatanaka told Reuters in an interview.

The company has 15 cancer drug candidates in its pipeline, with five of those drugs in late stage clinical testing and one submitted to authorities for approval.

Astellas expects sales of 1.1 trillion yen ($13.9 billion) and an operating profit of 226 billion yen in its 2014 business year.

"In the current midterm business plan that goes until (the business year) 2014 we have put the priority on investment (in cancer drugs) with the expectation that over the next five years or so, 2015 through 2019, we will see bigger sales and profits," the 54-year-old executive said.

Hatanaka did not rule out further acquisitions in Japan and overseas, following a flood of deals made by Japanese drugmakers in recent years as they look to expand their reach and stable of drugs.

"We are looking for positive collaborations that are in line with our strategy and strengthen our areas, and if there is an acquisition target with a large value for us, I would not be opposed to M&A," Hatanaka said.

In May, Takeda Pharmaceutical Co (4502.T), Japan's largest drugmaker, bought Swiss rival Nycomed for $13.6 billion, giving it access to a newly approved lung-disease drug and larger stakes in Brazilian, Chinese and Russian pharmaceutical markets.

That followed Daiichi Sankyo's (4568.T) acquisition of a majority stake in Indian generic drugmaker Ranbaxy for $4.6 billion, and an Eisai (4523.T) purchase of MGI Pharma for $3.9 billion to boost their cancer drug pipeline.

Astellas is projecting operating profit in its business year to March 2012 to rise 13 percent to 135 billion yen, which is slightly below an average estimate of 139.4 billion yen in a poll of 19 analysts by Thomson Reuters I/B/E/S.

The company is expecting increased sales of bladder drug Vesicare and anti-fungal agent Funguard along with revenue from its purchase of OSI Pharmaceuticals to offset declining sales of transplant drug Prograf and prostate medicine Harnal as their patents expire.

Hatanaka, who became president last month following senior management posts in the firm's corporate strategy department, a stint as leader of its U.S. unit, and more recently its CFO, said he expected results to be in line with company projections.

The drugmaker is scheduled to announce first-quarter earnings on August 1. ($1 = 78.940 Japanese Yen)

(Editing by Chris Gallagher)