Japan on the Move
Japan is the second largest economy in the world and like the rest of the world it is facing tough times in 2009. Despite this, the market for prescription drugs is significant with over US$70 B in sales and so remains a major contributor to the Japanese economy. A significant proportion of Japanese companies serve the domestic market that has seen dramatic cuts in reimbursement prices over the years. The larger Japanese pharmaceutical companies have seen their own market share drop while at the same time they have been attempting to expand their operations overseas.
In the past few years we have seen Takeda acquire Millennium Pharmaceuticals and set up their antibody activities in San Francisco. Shionogi, a relatively small player, has recently acquired Sciele, a speciality pharmaceutical company in the US. Further examples include the acquisition of Morphotek by Eisai and Agensys by Astellas, both antibody-based companies.
Additionally, this decade has seen the rise in mergers within Japan - the most famous being the merger between Yamanouchi and Fujisawa to form Astellas . Others have included the merger of Daiichi and Sankyo. Furthermore, there has been the emergence of biotech companies; these are smaller companies often spun out of universities.
The mergers are essential to these Japanese companies as they grow and build greater confidence in establishing their overseas operations and strengthening their pipelines. Our own observation is that Japanese companies are generally reluctant to pay the higher prices that other non-Japanese pharmaceutical companies are prepared pay for licenses or even acquisitions. This cautious approach may be good in the short-term but will it benefit their longer-term goals?