Japan: Pharmaceutical Companies Look for Overseas Deals

In May 2011, the Japanese drug company Takeda Pharmaceutical acquired the Swiss drug maker, NYcomed, for $13.7 billion. Takeda is one of the major Japanese drug manufacturers looking overseas for acquisitions. For some Japanese drugmakers, more rewarding opportunities await abroad in terms of return on investment.

One of the reasons Japanese companies are venturing overseas, is the rigid domestic governmental regulations. The Japanese government is bearing down on drug costs through strict price controls. In addition, domestic acquisitions often times limit the company’s freedom to integrate different business operations. The notorious difficulties in Japan of restructuring and firing excess staff are extremely taxing. Thus, Japan’s largest drug companies are shifting focus towards overseas acquisitions of generic drug companies.

In May 2008, Takeda acquired Millennium, a US biotechnology company, for $8.4 billion. The Japanese drugmaker also acquired half of Tap Pharmaceutical, also US-based, for $1.5 billion in July 2008. Other overseas Japanese acquisitions include Daiichi Sankyo’s purchase of Plexxicon and Astella’s acquisition of Aveo Pharmaceutical for $1 billion – both in the US in February of 2011. It is expected that additional Japanese pharmaceutical companies will continue to make more sizeable acquisitions over the next few years.