Otsuka Holdings, the Japanese pharmaceutical giant announced that it had struck a deal for $3.54 billion to acquire California-based Avanir Pharmaceuticals. Avanir Pharmaceuticals develops treatments of central nervous system disorders such as Parkinson’s and Alzheimer’s.

This acquisition comes in the wake of a recent tide of deals in the pharmaceutical industry, where big companies are concerned that they may not be able to create new blockbuster drugs on their own. Purchasing smaller, research-focused companies is seen as a means of filling their product pipelines, particularly as patents on popular older drugs expire.

In April, the Japanese pharmaceutical giant is going to lose patent protection for its widely used schizophrenia drug.

According to Otsuka, the company would pay $17 per share in cash for Avanir, which represents a premium of 13 percent to closing share price of Avanir on Monday. Otsuka added that it plans to begin a tender offer for the shares within 10 business days. Avanir said that its board had endorsed the offer.

This year, share price of Avanir has more than quadrupled. The firm’s strategy has been to focus on specific symptoms of neurological ailments – Its drug Nuedexta is used to treat uncontrollable laughter and sobbing, which is known as pseudobulbar affect, or PBA, and is associated with conditions such as Parkinson’s, Alzheimer’s and multiple sclerosis.

AVP-786, another treatment which is still in clinical trials, treats anxiety and restlessness associated with Alzheimer’s disease.

President of Otsuka Pharmaceutical, Taro Iwamoto said that Avanir’s proven execution and creativity on drug development and discovery for largely unexplored medical indications, typified by pseudobulbar affect, represents a hand-in-glove fit with Otsuka’s culture.

The Japanese pharmaceutical giant also makes Soyjoy nutrition bars and Pocari Sweat soft drinks. According to sources, Otsuka derives approximately 41 percent of its revenue from North America.