By Myra P. Saefong
Japanese drug makers are facing some stiff competition but
they're holding their ground and fighting back as they work to
boost overseas deals and raise their share of the generic-drug
market.
Japanese pharmaceutical firms are "likely to continue to pursue
overseas acquisitions and licensing arrangements, as well as beef
up their domestic generic-drug-launch capabilities," Raghuram
Selvaraju, head of health-care research at Hapoalim Securities,
said in a research note this week.
The Japanese government has said it wants to increase the
generic share of the domestic drug market from roughly 7% currently
to 30% or more over the next several years, said Selvaraju.
Competition, however, has been fierce, as rivals from overseas
enter the drug sector in Japan.
U.S. pharmaceutical firm Merck & Co. (MRK) plans to launch
Japanese sales of a generic biotech drug to treat anemia in 2012 or
later, the Nikkei business daily reported Wednesday.
Banyu Pharmaceutical Co., a Merck subsidiary, plans to sell its
offering for 20% to 30% less than patented versions, the report
said, adding that Merck plans to fully tap biotech drug
markets.
By the end of Tokyo's morning trading session, shares of
domestic drug makers were mainly lower. Daiichi Sankyo Co.
(4568.TO) fell 2.6%, and Dainippon Sumitomo Pharma Co. (DNPUF) lost
2.1%, while Eisai Co. (ESALF) was 0.1% higher. Astellas Pharma Inc.
(ALPMY) saw its stock fall 1.1%.
Weakness in the pharmaceutical stocks defied the modest gains
across most of Asia. The Nikkei 225 Average was up 0.3%, South
Korea's Kospi added 0.2%, and Australia's S&P/ASX 200 climbed
0.7%. China's Shanghai Composite Index added 0.1%, and Hong Kong's
Hang Seng Index tacked on less than 0.1%.
Competitive edge
Japanese drug makers have been doing all they can to stay
competitive in the pharmaceutical market.
The Nikkei reported Friday that Daiichi Sankyo planned to
co-develop generic drugs with Indian subsidiary Ranbaxy
Laboratories Ltd. (RBXZF) to sell in Japan as early as this fall.
The report described the move as the first full-scale entry into
the domestic generic-drug market by a major Japanese pharmaceutical
firm.
But in response to the news report, Daiichi Sankyo said it had
made no such announcement, although it's always reviewing
possibilities for strategic business development.
Japan's drug makers have also been using acquisitions and
licensing deals to expand their reach.
Overall, "the global health-care sector is seeing an increasing
trend of consolidation, with several billion-dollar deals done last
year as drug makers seek to expand their presence both
geographically and into new disease areas," said Selvaraju.
On Monday, Japan's Astellas Pharma launched a hostile takeover
bid for OSI Pharmaceuticals Inc. (OSIP) valued at about $3.5
billion in a move aimed at further expanding into the U.S. oncology
market.
Last year, Dainippon Sumitomo acquired Sepracor Inc. in an
all-cash tender offer valued at about $2.6 billion.
"As the Japanese pharmaceuticals market has become less
attractive -- declining domestic sales and a virtual logjam at the
Japanese regulatory agency being the principal factors -- leading
Japanese pharmaceutical companies have turned abroad to try to
identify new opportunities for growth," said Selvaraju.
And Astellas, Japan's second-largest pharmaceutical firm, has
been the "most aggressive recently," he said, pointing to Astellas'
separate licensing deals with U.S. company Medivation Inc. (MDVN)
and Swiss firm Basilea Pharmaceutica AG (BSLN.EB), each of which
required "significant upfront payments."
Astellas is also scrambling to develop next-generation drugs as
patents on its mainstay treatments expire, and the company said it
expects the OSI deal to support its growth strategy of becoming a
global leader in oncology, according to Selvaraju.
Hapoalim Securities expects that areas such as oncology and
neurology -- "specialty indications containing several significant
unmet needs -- are likely to represent the preferred targets for
acquisitions and licensing arrangements by Japanese companies,
given the more favorable reimbursement environment in these areas,"
he said.