Japan's vulnerable pharma companies, by P Reed Maurer

Once upon a time Japan’s pharma companies could be compared to a convoy of ships. The big and small, fast and slow ships all moved at the same pace, comments long-time Japan industry watcher P Reed Maurer, president of International Alliances Limited. Their businesses were largely confined to Japan, and they spoke with one voice to the government in terms of reimbursement prices and regulatory requirements, he notes.

This analogy and its consequences is now passé. Five companies depend heavily on overseas markets for sales revenue. As of fiscal year 2010 they were Otsuka 55%, Eisai 54%, Daiichi Sankyo 52%, Takeda 49% and Astellas 43%. Except for Otsuka, these four companies plus two others, ie, Dainippon Sumitomo and Shionogi, increased their foreign sales ratios through acquisitions of foreign companies.

From 2007 through April 2012 the six companies spent $42.640 billion to acquire 12 companies, a staggering amount that led many to suggest the acquisition costs were not justified. Companies on the other hand, countered by saying they are making long term investments to access emerging markets and product pipelines, particularly in oncology, that will pay off over time.