Mergers of Japanese Pharmaceutical Companies with Foreign Multinationals

On October 1, 2002, F. Hoffman-La Roche Ltd., a Swiss pharmaceutical company, merged with Chugai Pharmaceutical Co. Ltd. The merger will make Chugai a subsidiary of Nippon Roche K.K., Roche’s division in Japan. The name Chugai Pharmaceutical will be retained, however, Nippon Roche will hold 50.1% of Chugai’s shares.

This merger follows several recent mergers between Japanese pharmaceutical companies and foreign pharmaceutical companies. Already, Boehringer Ingelheim, a German pharmaceutical company, acquired 50% of SSP Co. Ltd., a Japanese self-medication company in late 2001. Abbott Laboratories also sought full ownership of Kokuriku Seiyaku in April of 2002.

Mergers and acquisitions in the Japanese healthcare industry are on the rise. This is largely due to government deregulation, the strong dollar, as well as greater recognition of the size and potential for opportunities in the Japanese market. Industry experts predict that many Japanese drug companies, which have long resisted global consolidation, will have to merge to survive and become more competitive in the global market.