Japan’s Shionogi is paying $1.4bn (€959m) for US drugmaker Sciele Pharma as part of a plan to strengthen its sales position in the country’s $286bn a year drug market.
Shionogi’s move is the latest in a raft of acquisitions by Japanese firms that has seen Takeda, Daiichi Sankyo and Eisai snap up US pharmaceutical firms. In Japan, where drug sales generate $65bn a year according to IMS Health data, overall growth has slowed to just 3.8 per cent.
Japanese acquisitions in the US market amount to more than $42bn in the last few years according to Thomson Financial. This suggests that although sales in emerging economies like Mexico, Brazil and Russia are expanding at a faster rate, the sheer scale of the US drug market still makes it an attractive proposition for overseas firms.
Under the terms of the acquisition agreement Sciele, which will continue to operate from its base in Atlanta, will become Shionogi’s second wholly-owned subsidiary in the country after Shionogi USA, which was founded in 2001.
At present however, Shionogi generates just 18 per cent of its turnover overseas, largely though sales of the cholesterol-lowerer Crestor which is marketed under license by AstraZeneca. The Japanese firm hopes that its new purchase will help it increase the turnover contribution from ex-Japanese markets.
As Shionogi’s president Isao Teshirogi explained: “Sciele has a well-established sales and marketing team with a proven track record in the US.”
Dr Teshirogi also said that Sciele’s experience with regulatory, clinical and business development will provide a strong platform for growth.
Patrick Fourteau, Sciele’s CEO, explained that: “The Sciele management team will remain in place, and we look forward to contributing to the continued growth and profitability of Shionogi in the US.”
Shionogi needs “sales force in the US”
Analyst response to the deal has been generally positive. “The company is in a niche and can bring profit to Shionogi,'' said Kenji Masuzoe, a health-care analyst at Deutsche Bank in an interview with Bloomberg. “It looks like a good and cheap purchase.''
These thoughts were echoed by Lehman Brothers’ analyst Toshihide Yoda, who told the Financial Times that: "Shionogi is not big enough to take over a large-size company and they don't need a pipeline, they need a sales force in the US."