Takeda Pharmaceutical has signed an agreement to sell its Xiidra 5% drug to Novartis for a total consideration of up to $5.3bn.

Xiidra is an anti-inflammatory medicine indicated to treat the symptoms of dry eye. The deal involves an upfront payment of $3.4bn, potential milestone payments of up to $1.9bn and the transition of around 400 employees to Novartis.

For the fiscal year ended 31 December 2018, Xiidra recorded adjusted net sales of $388m. Novartis expects the drug’s commercial footprint will support its current pipeline candidates.

"We look forward to leveraging our well-established commercial infrastructure to bring this medicine to more patients."

Novartis Pharmaceuticals CEO Paul Hudson said: "Xiidra, with its unique dual benefits, is an example of the type of innovative advances we invest in for the benefit of patients.

"We look forward to leveraging our well-established commercial infrastructure to bring this medicine to more patients."

Takeda acquired Xiidra in a $62bn acquisition of Irish biopharmaceutical company Shire. This deal made the Japanese company one of the top ten pharmaceutical companies in the world in terms of sales, but also caused financial debt.

The divestment is part of the company’s strategy to pay down debt by selling non-core assets worth up to $10bn. As a part of this strategy, Takeda will sell its TachoSil Fibrin Sealant Patch to Ethicon for around $400m in upfront cash.

Both deals are subject to customary closing conditions and are expected to be completed in the second half this year.

In a separate development, Novartis has completed an acquisition of IFM Tre for an upfront payment of $310m. This deal includes up to $1.265bn in milestone payments.

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