LONDON, U.K. - After falling behind rivals in the recent race to produce multibillion-dollar blockbusters in recent years, Britain's biggest drugmaker GlaxoSmithKline has now unveiled plans for a major biotech investment.
Seeking to rebuild its pharmaceuticals portfolio, GSK announced that it had agreed to buy the U.S. cancer drug specialist Tesaro in a massive deal worth $5.1 billion.
In a statement on Monday, the U.K. drugmaker said that it would pay $75 a share for Tesaro's business - which was a 110 percent premium to the 30-day average price.
While the high valuation sent GSK shares tumbling 4 percent on Monday, GSK said that the acquisition would give the company a marketed product for ovarian cancer, Zejula.
Zejula, which belongs to the promising new class of medicines called poly ADP ribose polymerase (PARP) inhibitors, drove $166 million in revenues, in the nine months to September.
Zejula's promising revenues in its current period indicate that it is a second-line maintenance treatment for ovarian cancer.
While GSK said that the acquisition should be accretive by 2022, it said that it would weigh on adjusted earnings for the first two years by mid to high single digit percentage rates.
The decision by GSK comes months after the company's Chief Executive Emma Walmsley indicated that the company was planning to make more acquisitions.
While GSK's previous CEO Andrew Witty largely sat out of a spate of acquisitions by rival firms, Walmsley has been prioritizing the drive towards replenishing GSK's medicines cabinet.