July 9, 2015 / 7:10 AM / 4 years ago

AstraZeneca divests gastrointestinal drug for $215 million

A sign is seen at an AstraZeneca site in Macclesfield, central England May 19, 2014. REUTERS/Phil Noble

LONDON (Reuters) - AstraZeneca struck a further “externalization” deal on Thursday to help fill its short-term revenue gap by divesting its gastrointestinal drug Entocort for $215 million.

The British drugmaker, which has high hopes for its new drug pipeline but faces declining sales as older products lose patent protection, said rights to Entocort outside the United States would be acquired by Tillotts Pharma, part of the Zeria Group.

Entocort, or budesonide, is used to treat patients with mild to moderate Crohn’s disease and ulcerative colitis. It is sold in more than 40 countries and had sales of $53 million outside the United States in 2014.

The transaction is expected to complete in the second half of 2015 and AstraZeneca said it would reinforce its strategic focus on selected therapy areas, such as cancer, respiratory disease and diabetes.

Chief Executive Pascal Soriot argues that spinning off non-core businesses like Entocort will help the company’s finances and allow it to invest for the future, but some analysts are worried about its reliance on such deals.

The issue came to a head in April when AstraZeneca said it was getting a $450 million windfall by letting Celgene develop a prized immunotherapy drug for blood cancers.

Soriot has also struck cash-generating externalization deals with Eli Lilly in Alzheimer’s and with Daiichi Sankyo for a new constipation drug.

Reporting by Ben Hirschler; Editing by Pravin Char

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