To lighten its debt burden of more than $30 billion resulting from last year’s acquisition of Shire, Japanese pharma giant Takeda is selling Shire’s dry-eye drug Xiidra to Switzerland’s Novartis.

The deal is set to close in the second half of this year, with 400 Takeda employees working on the Xiidra franchise – mainly in the US and Canada – transferring to the Swiss drugmaker’s payroll.

Novartis, which wants to strengthen its eye medicine portfolio following the spinoff of Alcon, said Xiidra “fits strategically” with its ophthalmic portfolio. Terms of the deal call for it to pay $3.4 billion upfront and commit to potential milestone payments of up to $1.9 billion.

The Xiidra sale is the first for Takeda since its $62 billion Shire takeover. The Japanese company hopes to shed products worth around $10 billion in annual sales to pare down debt. Analysts expect it to sell its European over-the-counter business, its entire Latin American operation, Shire’s hypoparathyroidism drug Natpara and a Shire inflammatory bowel disease candidate.

With annual revenue of about $400 million, Xiidra is “well positioned for blockbuster potential,” Novartis said.  The Swiss drugmaker’s ophthalmology medicine franchise, spearheaded by the age-related macular degeneration treatment Lucentis, which it shares with Roche, has sales of $4.56 billion.

Novartis has its own developmental dry eye therapy, a recombinant form of human lubricin in-licensed from Lubris in 2017. Under the name ECF843, the drug is in phase 2 trials with a planned first regulatory submission in 2022. With the takeover of Encore Vision in late 2016, the company acquired a topical treatment for presbyopia knowns as UNR884.

Takeda also plans to sell its TachoSil surgical patch to Johnson & Johnson subsidiary Ethicon for about $400 million. The patch has sales of around $155 million. Takeda will continue to make the product at Linz, Austria, and supply J&J under a long-term agreement.