Astellas Pharma will sell its global dermatology business to LEO Pharma for €675 million ($724.7 million), a year after the seller lost U.S. patent exclusivity on its top skincare drug.

LEO Pharma will acquire the assets and associated responsibilities relating to Astellas’ treatments of acne and skin infections including Protopic® for atopic dermatitis in most of the world, and other products predominantly sold in the Europe-Middle East-Africa (EMEA) region. Not covered by the deal is Protopic in Japan, where distribution rights were transferred by Astellas to Maruho last year.

In the U.S., Protopic is indicated as a second-line therapy for the short-term and non-continuous chronic treatment of moderate to severe atopic dermatitis in non-immunocompromised adults and children who have failed to respond adequately to other topical prescription treatments for atopic dermatitis, or when those treatments are not advisable.

Sales of Protopic in the “Americas” region that includes the U.S. plunged 19.3% in the fiscal year that ended March 31, to $94 million “mainly due to generic drugs launched in the U.S. from November 2014,” Astellas stated in its 2015 Annual Report. Astellas lost U.S. patent protection on Protopic last year.

By contrast, Protopic sales in EMEA grew 7% to €56 million ($60 million), and 33% to ¥3.4 billion (about $27.7 million) in Asia & Oceania.

In addition to Protopic, Astellas’ dermatology portfolio of prescription and over-the-counter products includes Locoid® and Locobase® for skin care and Zineryt® for acne.

Until now, dermatology has been one of Astellas’ six “key” therapeutic areas, along with cardiology, immunology, infectious disease, oncology, and urology. Yet as early as 2013, Astellas has sought to exit the specialty. In June of that year, Reuters reported that Astellas was looking to sell its dermatology portfolio, possibly by breaking it up and selling portions to several buyers.

Astellas’ dermatology portfolio was estimated to be worth between $500 million and $1 billion, according to three unnamed “people familiar with the situation” cited in the report—a range borne out by the price paid by LEO Pharma.

“We feel that dermatology patients around the world will be better served by transferring these products to LEO Pharma, a company with a strong focus on the dermatology therapeutic area,” Astellas President and CEO Yoshihiko Hatanaka said in a statement issued yesterday.

LEO Pharma said the deal—its largest-ever since the company was established in 1908—was “a pivotal step” toward its goal of global leadership in dermatology treatments. The company’s dermatology focus includes actinic keratosis and psoriasis—for which LEO markets Taclonex® ointment and Taclonex® Scalp, as well as Donovex® cream. Last month, the FDA approved the company’s once-daily, alcohol-free foam spray Enstilar® for plaque psoriasis in adults.

LEO estimated the deal will increase its annual revenues by more than 20% and give the company a firm foothold in markets such as China and Russia and adds critical scale in many other markets.

The buyer also said the deal reflected its 2020 strategy, which combines growth through acquisitions and partnerships along with internal innovation in order to make its products available to more than 70 million people by the year 2020.

“This is a historic milestone for LEO Pharma and will be instrumental in our efforts to help even more people living with skin diseases,” added Gitte Aabo, LEO Pharma’s CEO and president. “We are excited about this opportunity and look forward to working closely with Astellas to ensure a seamless transfer of the portfolio.”

Headquartered in Ballerup, Denmark, LEO Pharma began in the basement of the LEO Pharmacy in Copenhagen following its purchase by the company’s co-founders, pharmacists August Kongsted and Anton Antons. The company employs more than 4,800 people in 61 countries worldwide, and bases its U.S. subsidiary in Parsippany, NJ.

The deal is expected to close in the first quarter of 2016, the companies said, subject to the satisfaction of customary closing conditions, including review and approval by competition authorities.

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