The purchase will help expand Otsuka’s neurologic drug lineup ahead of the patent expiration for one of its top drugs Abilify, a treatment for schizophrenia. Once its exclusivity rights end in April 2015, the company will have to fend off generic competition for a drug that brought in $5 billion last year — about 40% of Otsuka’s total sales.

Otsuka will pay $17 a share in cash for Avanir (AVNR), a 13.3% premium to the drugmaker’s Monday closing price. The deal is expected to close in the first quarter next year.

“Avanir’s creativity and proven execution on drug discovery and development for largely unexplored medical indications,” said Otsuka CEO Taro Iwamoto. “Represents a hand-in-glove fit with Otsuka’s culture.”

The deal will create a company focused on central nervous-system disorders. Avanir focuses on neurological conditions, and paired with Otsuka’s expertise in mental illnesses, the deal will further focus the drugmaker on diseases affecting the central nervous system.

Avanir developed Nuedexta, a drug that treats pseudobulbar affect, a neurologic condition that causes involuntary crying or laughter. The Southern California drugmaker will operate as a unit of Otsuka America once the deal is complete.