AstraZeneca plc (NYSE:AZN) (LON:AZN) in an effort to boost its product pipeline has announced plans to acquire Pearl Therapeutics for up to $1.15 billion, says a report from Reuters.

astrazeneca logo

How It Will Help AstraZeneca

The acquisition of the respiratory drug specialist will help AstraZeneca plc (NYSE:AZN) (LON:AZN) expand in emerging markets with a new class of lung treatments known as LABA/LAMA drugs. The special treatment enhances patient compliance and disease control, without steroids.

According to experts, LABA/LAMA treatment will be a potential therapy for chronic obstructive pulmonary disease (COPD) from which an estimated 210 million people suffer worldwide.

Chief executive Pascal Soriot, who last October took over the company’s respiratory business, thinks the deal is an important bet as the respiratory business is a core therapy area.

The British firm’s revenues and profits are declining due to loss of patent protection for some of its older drugs. The drug major is in dire need of new products to substitute the older big sellers, like the antipsychotic Seroquel, which lost patent protection last year.

The deal marks the second acquisition in two weeks by AstraZeneca plc (NYSE:AZN) (LON:AZN). Earlier it acquired Omthera Pharmaceuticals Inc (NASDAQ:OMTH) for $443 million to support its cardiovascular drug business.

 AstraZeneca Deal’s Details

In a statement released by AstraZeneca plc (NYSE:AZN) (LON:AZN) on Monday, the company said it will be making an initial payment of $560 million and an additional pay of up to $450 million depending on the milestones achieved. The drug maker will also make a payment of up to $140 million related to sales.

Late to the Market

AstraZeneca has a popular inhaled respiratory drug in Symbicort, but for long run success the drug requires a LABA/LAMA inhaler. PT003, which is Pearl’s main offering, is in final-stage Phase III clinical trials. Pearl also has another product called PT010, which is a triple-combination medicine.

The U.S. based drug maker will be a prized addition in AstraZeneca’s respiratory portfolio. In spite of the acquisition, Britain’s second biggest drug maker will still lag its bigger rivals like GlaxoSmithKline plc (NYSE:GSK) and Novartis AG (NYSE:NVS) (VTX:NOVN) in the inhaled drug segment.

PT003 may be late coming to the market, considering Novartis may get approval for its LABA/LAMA product in Europe later this year with GlaxoSmithKline plc (NYSE:GSK) soon to follow in Europe and the United States. Also, Germany’s Boehringer Ingelheim and Forest Laboratories may get over with their Phase III programs before PT003.

The deal is expected to be completed by the third quarter of 2013, and will have no affect on AstraZeneca plc (NYSE:AZN) (LON:AZN)’s financial guidance for the year.