Shares of Takeda Pharmaceutical Co. fell the most in nine years after the firm disclosed it is considering a bid for Shire PLC that could approach $50 billion (about ¥5.3 trillion), which would be the Japanese company’s biggest takeover ever.

The decline in early Tokyo trading shaved $3 billion from Takeda’s market cap. Coupled with a rally in Shire’s stock on the news, the valuation gap between the two companies widened by almost $6.5 billion, posing a bigger financial challenge for Takeda if it decides to go forward with an offer.

“Takeda is just desperate to beef up its pipeline, and they’ve been doing small bits of acquisitions on the biotech side,” said Fumiyoshi Sakai, a Tokyo-based analyst at Credit Suisse Securities. “But how they are going to finance $40-some billion? That’s another one.”

Takeda shares dropped as much as 7.45 percent to close Tokyo trading on Thursday.

After Takeda’s announcement Wednesday, Shire said in a statement that it hasn’t received any formal approach or offer, and that the Japanese drugmaker has until April 25 to do so or walk away under U.K. takeover rules. Shire, based in Lexington, Massachusetts, and listed in London, gained 14 percent in European trading Wednesday.

Takeda is ramping up its takeover ambitions under CEO Christophe Weber, who’s seeking growth overseas as patent expirations and a shrinking domestic population limit opportunities at home. The Osaka-based company did not explain how it will pay for a company whose $45 billion market value tops Takeda’s $38 billion.

A combination would propel Takeda into the ranks of the world’s top drugmakers. It would also boost Takeda’s position in drugs for cancer, gastrointestinal diseases and nervous-system ailments, adding key treatments that are in the late stages of testing, according to a statement Wednesday.

Takeda’s announcement comes amid a flurry of transactions in the pharmaceutical sector, marked by GlaxoSmithKline PLC’s $13 billion agreement to buy out Novartis AG’s stake in their consumer-health joint venture earlier this week. Pfizer Inc. and Merck KGaA are seeking buyers for their over-the-counter units, and Sanofi has announced more than $16 billion worth of acquisitions this year.

The Osaka-based company said its interest is at a “preliminary and exploratory stage” and it has not formally approached Shire’s board.

Takeda, which is Japan’s biggest drugmaker, still has the scope for acquisitions after the $4.7 billion purchase of U.S. biotech Ariad Pharmaceuticals Inc. last year, Weber said in a November interview. He said then that the company is mainly focused on forming more research partnerships and moving its pipeline products into later stages of development to help drive growth.

Shire would give Takeda a broader portfolio in the U.S. as well as an entry to the hemophilia market, which fits Weber’s stated goal of expanding in more expensive drugs targeted at small patient groups. The combined company’s trailing 12-month revenue would be $31 billion, which would place it ninth among drugmakers worldwide, according to data compiled by Bloomberg.

Shire CEO Flemming Ornskov has moved to put the company on a new course, partly by focusing on treatments for rare diseases that can command high prices. The drugmaker has turned from predator to prey in recent years as its shares have slumped since its takeover of Baxalta Inc. The stock lost 21 percent this year before Wednesday’s announcement. An attempted $52 billion takeover by AbbVie Inc. was terminated in 2014.

A deal for Shire would surpass Takeda’s 2011 acquisition of Nycomed for $13.7 billion including debt, according to data compiled by Bloomberg. Japanese companies have announced $26.5 billion worth of overseas acquisitions this year, up from $17.8 billion in the same period a year earlier, the data show.

Takeda made a slew of deals in 2018.

It announced an offer to acquire TiGenix NV, a Belgian maker of stem-cell therapies, for €520 million ($645 million) in January, as well as a $150 million initial payment to Denali Therapeutics Inc. for a partnership to develop drugs for neurodegenerative diseases. In February, Takeda promised another $230 million to Wave Life Sciences for a pact on treatments for disorders of the central nervous system.

While an acquisition of Shire might make strategic sense, the potential size of the deal and the U.S. company’s ongoing integration of hemophilia-drug maker Baxalta raise risks for the Takeda, said Peter Welford, an analyst with Jefferies.

“We presume Takeda would need a significant equity raise to acquire Shire, suggesting a ‘merger’ is perhaps better terminology, which may raise hurdles to the successful completion of any future deal,” he said in the note.

Shire said earlier this year that it was considering spinning off its neuroscience business, which makes drugs for attention deficit and other conditions, into two separate units.

Takeda had ¥440.3 billion ($4.2 billion) in cash, cash equivalents and short-term investments as of Dec. 31, according to data compiled by Bloomberg.