When the "giant" of the pharmaceutical industry targets a specialized niche and lessons for Vietnamese pharmaceutical enterprises

In the context of the global pharmaceutical industry restructuring after the pandemic and entering a period of outstanding biotechnology development, mergers and acquisitions (M&A) have become a strategic tool for large pharmaceutical corporations to expand their product portfolios.  access to new technologies and accelerate market share. One of the notable deals in Q1 2025 is the acquisition of Checkpoint Therapeutics Inc. (USA), a pioneer in immunotherapy for skin cancer.

This article will in-depth analyze the deal, the strategic objectives of pharmaceutical giant Sun Pharma, and propose some valuable experiences for Vietnam's pharmaceutical industry, an economic sector that is considered very promising and is eager to integrate deeply into the global value chain to develop research capacity.  production of new drugs.

1. Sun Pharma acquires pharmaceutical company Checkpoint Therapeutics[1]

1.1 General information

Buyer: Sun Pharma – India's largest pharmaceutical company, operating in more than 100 countries, has a strong product portfolio of generic drugs, specialty drugs and healthcare products.

Seller: Checkpoint Therapeutics – a Nasdaq-listed biotechnology company, is in the stage of commercializing its first product: UNLOXCYT™ (cosibelimab-ipdl) – a cSCC skin cancer drug.

1.2 Deal value

Information on the announcement of the transaction shows that when the buyer of Sun Pharma completes the transaction and fully meets the conditions in the agreement of the parties, Sun Pharma will pay the shareholders of Checkpoint Therapeutics the following amounts:

1. Cash payment: $4.10 per share, for a total of about $355 million.
2. Plus additional receiving rights (CVR) up to $0.70 per share if the drug is approved in the EU before the specified deadline.
3. Total potential value: about $415 million.

1.3 Sun Pharma's strategic purpose

Firstly, strengthening its position in the field of skin cancer treatment (onco-dermatology)

Sun Pharma has been investing heavily in the field of specialty medicines, especially skin cancer, an area where the demand for treatment is increasing due to environmental pollution and prolonged sunlight exposure. The acquisition of Checkpoint and the ownership of UNLOXCYT helps the company:

• Diversify the portfolio of skin cancer treatments, in addition to existing products;
• Shorten the time to market compared to self-research from scratch;
• Take advantage of FDA approval to expand to other major markets such as the EU, Japan, Canada, Australia.

Second, accelerate the product commercialization cycle

• UNLOXCYT has been approved by the FDA, i.e. it is almost "ready for the market".
• Sun Pharma has the global manufacturing capacity, distribution and marketing network to bring drugs to market quickly – something Checkpoint cannot do independently due to scale limitations.

Third, the value of the deal is reasonable to buy

Checkpoint only had revenue of $40,000 in the first 9 months of 2024, a net loss of $27.3 million, and barely enough cash to commercialize itself. Sun Pharma acquires strategic assets at a "discounted" price, while avoiding the risk of prolonged and costly research.

Fourth, the financial structure and shareholder interests are harmonized between the seller and the buyer

In this transaction, Sun Pharma paid $355 million in cash at a price 66% higher than the Checkpoint stock price just before the transaction announcement. This immediately brings value to Checkpoint's existing shareholders, especially when the company's business results are not good. In addition, Checkpoint shareholders can also receive a CVR if the drug is approved in Europe. In particular, according to the agreement of the transaction, Fortress Biotech, one of the founding and controlling shareholders of Checkpoint, is entitled to convert share ownership into the right to receive future revenue royalties. This is a very beneficial deal for the founder and largest shareholder of Checkpoint. At the same time, this agreement attaches Fortress Biotech to the responsibility to apply  for a license for marketing approval of UNLOXCYT™ (cosibelimab-ipdl) so that this shareholder can receive additional proceeds from the sale of shares from the buyer. This is a model of risk sharing and harmonizing benefits between relevant parties.  and also reduce immediate financial pressure for buyers but still ensure long-term benefits for Checkpoint shareholders.

2. Lessons learned for Vietnam's pharmaceutical industry

Vietnam is a country with an impressive growth rate in Southeast Asia, but there are still many bottlenecks in research and development (R&D), commercialization of new drugs and attracting strategic investment. The Sun Pharma – Checkpoint deal can bring Vietnamese pharmaceutical enterprises many valuable lessons about development orientation in the coming time.

2.1 Strategy towards a specialized niche in the pharmaceutical industry

Through the transaction, it can be seen that Checkpoint does not compete in the broad market but focuses on a niche with a specific and clear need for the treatment of cutaneous squamous cell carcinoma (cSCC). This, in turn, helped them develop a product that was "the first and only FDA-approved," capable of generating breakthrough profits.

Vietnamese pharmaceutical companies can learn from this development strategy. Vietnamese pharmaceutical startups should focus on specialty treatment or rare disease niches[2], where competition is low, but fast licensing opportunities and profit margins are high. Early cooperation with major partners in the value chain such as hospitals, investment funds, and research institutes will help the product have higher commercial viability.

Hau Giang Pharmaceutical Joint Stock Company. Source: Securities Investment News

2.2 Biological development model by technology transfer

With the goal from the beginning, Checkpoint is a company that does not manufacture but focuses on research and application for approval of research drugs. When successful, Checkpoint has the full right to resell or commercialize large companies to bring these original brand name drugs to the market. This research and transfer model, also known as "build-to-transfer", can be applied in Vietnam, especially when enterprises have weak internal resources in distribution and large-scale production.

To do this, Vietnam needs to build an ecosystem including:

• High-tech biotech (R&D-focused) startups;
• Incubators and angel investors (such as BioMed Valley models in Singapore or India Bio[3]);
• Large domestic pharmaceutical company (in the role of receiving and commercializing drugs from research and development activities).

2.3 Make smart deals to share risks together

Sun Pharma accepts a post-payment (CVR) if the drug is approved in the EU. This is a smart M&A strategy, linking responsibility with results with the payment both to limit risks and create initiative and positivity from the seller to put drugs into circulation soon in practice.

From this deal, Vietnamese pharmaceutical enterprises can also learn to negotiate share purchases, research cooperation, and joint development. At the same time, the investment structure is designed according to the "development milestone" roadmap, instead of pouring capital once. This is especially important for biotechnology projects that are high-risk and can last for decades.

3. Some policy recommendations for Vietnam's pharmaceutical industry

In order to promote similar deals or unlock the potential for technology transfer in the pharmaceutical industry, the State should consider and implement the following tasks:

Firstly, building a legal framework for the transfer of commercial rights (licensing)

Vietnam currently does not have a separate framework for the transfer of drug research and development rights. This is the key mechanism for a small company to profit from the idea, without developing it to the commercial stage.

Second, encourage investment in biotech startups

The state needs to have specialized venture capital funds, tax incentives for medical and biopharmaceutical startups, similar to Malaysia's BioNexus program[4] or Australia's BioAccelerator[5]. With the aim of encouraging investors, research institutes, schools and even related businesses to invest and spend money on the research of brand-name drugs, in order to help the Vietnamese pharmaceutical market develop in depth, with many products with great value.

Third, strengthen cooperation between research institutes, businesses and hospitals

The tripartite collaboration is the foundation for rapid application research, increased likelihood of obtaining licensing and deploying small-scale clinical trials. This is a model that Checkpoint has applied very successfully in the US. Therefore, stakeholders in Vietnam and especially regulators can encourage and promulgate policies to promote this model to develop in Vietnam as soon as possible. A fair and effective environment is needed for this model to develop extensively in Vietnam in the near future.

Sun Pharma's acquisition of Checkpoint Therapeutics is a "case study" of M&A strategy towards breakthrough products in the pharmaceutical biotechnology industry. This transaction not only reflects the globalization trend of the pharmaceutical industry, but it also brings many strategic suggestions to Vietnam from niche market approaches, building a "start-up-to-transfer" model, to financial and legal techniques in the deal structure. We believe that, in the context that Vietnam's pharmaceutical industry is aiming for self-sufficiency in production, development of new drugs and participation in the global supply chain, it is very necessary to learn innovative M&A models and venture capital thinking such as in the Sun Pharma – Checkpoint deal.