Roche has signed an agreement to purchase InterMune, a Brisbane, California-based biotechnology company focused on the research, development and commercialization of innovative therapies in pulmonology and orphan fibrotic diseases. At a price of US$ 74.00 per share, the total value of the all-cash transaction is $8.3 billion.

This merger will allow Roche to expand its respiratory product portfolio with InterMune’s lead product pirfenidone for idiopathic pulmonary fibrosis (IPF). There is no established cause of IPF, and according to the Coalition for Pulmonary Fibrosis, about 128,000 Americans suffer from this rare disease that typically kills in five years.

Roche and InterMune Announce Definitive Merger

Pirfenidone is approved for idiopathic pulmonary fibrosis (IPF) in the EU and Canada and is under FDA review in the United States. According to a Bloomberg report, the current agreement reflects Roche’s confidence in pirfenidone.

Research published earlier this year showed that pirfenidone halved a patient’s risk of dying from idiopathic pulmonary fibrosis after the first year of treatment, and this roused Roche’s interest in the drug. Roche already markets two other respiratory medicines – Pulmozyme for cystic fibrosis and Xolair for asthma.

Roche’s business strategy is focused on adding specific brands that will enhance its product offerings. The world’s largest maker of cancer drugs, Roche has strived to expand outside of oncology, and even stopped the development of diabetes and heart disease drugs in recent years. The company has been working with InterMune to develop drugs for hepatitis C since 2006.

The merger is expected to bring in huge economic gains for both companies. Analysts predict that pirfenidone could generate $1 billion a year. The offer also provides significant value to InterMune’s shareholders and experts say that merging into Roche’s existing operations can significantly reduce InterMune’s current expenses.

Summing up the transaction, InterMune’s Chairman, CEO and President, Dan Welch, said “Roche’s global resources and scale will not only facilitate and accelerate our ability to deliver pirfenidone to more patients around the world, but also to realize our joint vision to bring additional innovative therapies to patients with respiratory diseases”.