Last month, AstraZeneca (AZ) took a major step to build up its respiratory franchise by striking a deal for the commercial rights to Spanish group Almirall's respiratory portfolio. The transaction, which is expected to complete by the end of 2014, could be worth up to $2.1 billion. It comprises an initial upfront payment of $875 million to Almirall and up to $1.22 billion in additional payments tied to performance, both regulatory and commercial, milestones. AZ CEO Pascal Soriot had previously identified the respiratory therapy area as one of his key growth drivers, in an attempt to prove AZ can deliver value to shareholders independently, when the company rejected Pfizer's takeover bid earlier this year. These new assets will provide AZ immediate access to on-market revenues as well as create long-term value through strategic fit of Almirall's complementary drug pipeline and inhaled device capabilities for the treatment of both asthma and chronic obstructive pulmonary disease (COPD). In the short-term, the deal gives AZ access to Almirall's share of revenue from the currently marketed long-acting muscarinic antagonist (LAMA), Eklira/Tudorza. AZ will also acquire selected European and Canadian rights to this drug from Almirall while U.S. rights will remain with Actavis. These sales will contribute to AZ's sales at a time when respiratory sales begin to decline due to the loss of patent protection for its blockbuster drug, Symbicort (a fixed-dose combination of budesonide and formoterol).

Almirall's decision to sell-off its respiratory franchise may seem surprising, since respiratory was its leading therapeutic area and accounted for 30percent of its 2013 sales. However, the high cost of large clinical trials and heavy marketing expenditure ensure that it would be challenging for Almirall to compete against industry heavyweights such as GlaxoSmithKline and AZ. Therefore, selling the franchise to the more-experienced AZ, while retaining a stake in its development, is a notable win for Almirall.  The sale of these products and programs will allow the company to reduce costs and risk while retaining an important economic interest in the franchise's potential success. In addition, Almirall will be able to move more aggressively in other specialty areas of focus including dermatology, where the company seeks to become a global player and can build up this business with its substantially increased financial resources.

Unfortunately, while Almirall's assets will certainly grow AZ's respiratory franchise, the overall impact on the company may not be enough to thwart shareholders from agitating for the board to accept a sweetened takeover offer from Pfizer or another potential suitor. Pfizer desperately needs a promising acquisition to boost growth, and AZ - due to its size, tax inversion opportunity and valuation - remains a compelling target.

Sangha Mitra is a business insights analyst on the Immune and Inflammatory team at Decision Resources Group.

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