Specialty Pharmaceuticals : Merck Bolsters Eye Care Franchise With Inspire Purchase

Merck & Co. will expand its eye care franchise with a $430 million cash deal to acquire Inspire Pharmaceuticals, a Raleigh, N.C.-based specialty drug firm focused on eye disease. The move, announced last week by Merck, underscores the ongoing merger and acquisition (M&A) activity among specialty pharmaceutical companies.

Merck’s existing ophthalmology franchise includes Saflutan, a prostaglandin analog solution that is currently under regulatory review in the U.S. Inspire adds two marketed products: AzaSite, a treatment for bacterial conjunctivitis, and Elestat, approved to prevent itching associated with conjunctivitis. The specialty pharma company also contributes two glaucoma treatments—a Rho kinase inhibitor and a latrunculin B compound—that have completed Phase I trials.

Inspire has struggled since January to conserve resources after disappointing results from a Phase III trial of its cystic fibrosis treatment, denufosol. The drug, which improves lung hydration by increasing the number of chloride ions being shuttled to the organ, failed to ameliorate lung function in CF patients. In February, the company shed 65 positions, nearly half of its nonsales staff, as it narrowed its focus to eye care.

Eleven deals with a specialty company as either the buyer or seller have been announced since the beginning of the year, totaling $12 billion in value, Deutsche Bank analyst David M. Steinberg said in a note to investors. “Inspire’s acquisition highlights the ‘sweet spot’ for M&A in specialty pharma—companies with market capitalization between $350 million and $5 billion,” he wrote.