12:00 AM
 | 
Feb 12, 2007
 |  BioCentury  |  Strategy

Globalizing Mitsubishi Tanabe

For over a decade, Japanese pharma companies have been trying to figure out how to create critical mass in the world market. Tanabe Seiyaku Co. Ltd. and Mitsubishi Pharma Corp. are the latest companies to merge in hopes of becoming worldwide players. The companies say that the next step is to reinforce their overseas development and marketing infrastructure.

According to Tanabe spokesperson Kumiko Saika, recent healthcare reform by the Japanese government has lowered drug prices and accelerated the use of generics, shrinking the domestic market and stifling the incentives to develop innovative drugs for Japan. As a result, Japanese companies have concluded that they must tap into global markets to achieve growth.

"It is necessary for us to find a means of survival overseas," Saika told BioCentury.

But Japanese pharmas have another hurdle to jump: Japanese investors. Big R&D budgets are necessary to compete with global pharma companies based in the U.S. and Europe, but Japanese investors focus on earnings even more than their Western counterparts and are not comfortable with large R&D spend.

As a result, said Tuan Ha-Ngoc, president and CEO of Aveo Pharmaceuticals Inc. (Cambridge, Mass.), the only way Japanese pharmas can reach critical mass and compete globally is through M&A.

Aveos AV-412, a second-generation multiple-kinase inhibitor that targets EGFR, was in-licensed from Mitsubishi.

Tanabe and Mitsubishi are the latest companies to...

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