The Avanti Group the equities research house based in Tokyo, providing professional trading and investment research solutions to institutional and private investors across the globe have recently drawn their investor’s attention to Chugai Pharmaceutical following its shares climb by as much as 21%, their largest surge since 1974, climbing up to 4,015 yen, before later trading at 3,795 yen on the Tokyo Stock Exchange. The surge increased the drug maker’s market valuation to nearly $21 billion, with the takeover deal possibly being announced as early as later this week. The acquisition of Chugai would be the largest for Roche since 2008, its $44 billion bid for Genentech Inc.

Roche, which has owned a 62% stake in Chugai as of June 30, is reportedly in talks with the Japanese drug manufacturer to acquire the rest of the company’s shares for around $10 billion. Pharmaceutical companies completed nearly $238 billion worth of acquisitions this year, over three times that of last year’s total, the highest such level since 2001.

“While Chugai’s greatest gain in forty years is of course news worthy, the real story here is just how high they will rise further as new details emerge regarding the offer from Roche to take full control of the Japanese drug manufacturer and of course the market reaction to the Swiss pharmaceuticals access to the next generation of cancer fighting medications that will come about from this acquisition if it is successful,” said said Murakami Hiroto, Senior Vice President of Global Investment for The Avanti Group.

In July, Roche, which is the world’s biggest manufacturer of cancer medications, agreed to purchase Seragon Pharmaceuticals Inc for as much as $1.7 billion in a move aimed at gaining for the Swiss company a new generation of experimental treatments for treating breast tumors. The company’s Chief Executive Officer Severin Schwan stated in July that his company is still looking for additional targeted acquisitions within the pharmaceutical and biotechnology sector due to ongoing high valuations.

“Roche is by definition at the centre of the cancer treatment industry, being the largest producer of cancer medications, so this total acquisition of Chugai makes a great deal of sense, especially in light of their existing majority holding in the Japanese company, Chugai's work on anti arthritis treatments will also come as a benefit to the larger drug maker’s bottom line within a short period,” concluded Murakami Hiroto, Senior Vice President of the Global Investment department at The Avanti Group.

The Avanti Group is an equity research house providing research and analysis outsourcing solutions for institutional financial traders worldwide, founded in early 2003.