Japan drug industry indulges yen for biotech
TOKYO: Japan’s largest drugmakers are on a biotechnology shopping spree, raising the cost of takeovers and new products in the global pharmaceuticals industry.
Takeda Pharmaceutical and Eisai spent $500 million last month for acquisitions, almost five times as much as all Japanese companies paid in the two previous years for biotech. The deals came after Japan’s government cut prescription-drug prices 6.7 percent and companies failed to produce medicines with the potential to reach $1 billion in sales.
The new competition means American and European companies, including Merck and Novartis, may need to pay more as they pursue the same strategy. The top four Japanese drugmakers had more than $21 billion in cash last year, double the combined amount disclosed by Pfizer, GlaxoSmithKline, Sanofi-Aventis and Novartis in their annual reports.
“Prices could go up as a result of Japanese buying,” said Leslie Pryce, a former Glaxo executive who heads the pharmaceutical consulting group New Business Horizons in Nagoya, Japan. “They have a lot of cash.”
Biotech companies were targets in mergers and acquisitions worth $68 billion over the past seven years, based on data compiled by Bloomberg. Half the buyers were from the United States, a fourth were European and fewer than 2 percent were based in Japan. Last year the number of biotech deals in North America rose 32 percent to 232, and the average premium over the price of traded shares rose to 33 percent from 23 percent, based on data compiled by Bloomberg.