LONDON—If an ounce of prevention is worth a pound of cure,two companies' worth of prevention might be worth its weight in gold, andpharmaceutical giants GlaxoSmithKline (GSK) and Daiichi Sankyo are banking onthat. The companies recently announced the signing of an agreement to form ajoint venture together, one that is expected to result in the No. 1 vaccinescompany in Japan.
The joint venture, which will be based in Tokyo, will holddevelopment and commercial rights for existing preventative vaccines from bothcompanies, including vaccines for seasonal flu, human papillomavirus,rotavirus, mumps, diphtheria pertussis and measles rubella.
"This collaboration marks another step in our strategy tobuild our presence in key growth markets and will create the first and largestcompany dedicated solely to vaccines in Japan," Christophe Weber, presidentdesignate of GSK Vaccines, said in a press release. "We are very pleased to bepartnering with Daiichi Sankyo, a highly regarded company and an establishedleader in Japan. Both companies have strong track records in commercializationand, in combination, will create further significant economies of scale in thedevelopment and distribution of vaccines in the Japanese market."
The two companies will form Japan Vaccine Co. Ltd., eachselling their respective vaccines into the joint venture at agreed-upon prices,and will receive sales synergies. GSK and Daiichi will hold equal stakes in thejoint venture and will split profits 50/50, with the partners equally splittingthe minimum total cash investment of 100 million Yen (approximately $1.2million) for start-up capital requirements. No additional financial terms weredisclosed.
Masaya Tamae, director of the public relations group inDaiichi's corporate communications department, says that the opportunity topartner with GSK was "extremely significant" for the company, adding thatDaiichi has "high expectations that the partnership will prove fruitful in theroles it will take on, such as vaccine development, marketing and sales, aswell as in other areas such as vaccine research and manufacturing."
"Moreover, we expect the company to contribute greatly tothe group's business results, as well as improve our presence in the growingJapan domestic vaccine market," Tamae adds. "As a Japanese pharmaceuticalcompany, we feel an acute responsibility to contribute to improved health andwelfare in Japanese society, as well as to do everything we can to help protectpeople living in Japan from infectious diseases."
The location of the joint venture in Japan is a benefit forGSK as well, a company spokesman notes, as GSK already has "a strong presencein Japan in its own right." The company reported 28-percent growth in Japan in2011 on an underlying basis, and the Japanese market, in addition to the U.S.market, "is one of the key pro-innovation markets where we are focusing ourR&D efforts." The company feels that combining Daiichi Sankyo's history inthe country with GSK's vaccine expertise together in the joint venture will"have a positive impact on public health in Japan."
"There are many factors that GSK takes into account whendeciding on whether to enter into a JV. The choice of partner, the developmentpotential and how the venture will fit into our growing global vaccinesdevelopment network were all important considerations," says GSK's spokesman."Daiichi Sankyo meets all of these criteria and holds similar values andcommitment to excellence and meeting public health needs to GSK, and emerged asthe natural choice to partner with on this JV."
They went on to note that "Japan is emerging as a key driverof innovation in the pharmaceutical sector, and we expect this to translateinto growth in the future as more companies focus their efforts in the region,"adding that the pharmaceutical market has seen 5.6 percent growth in Japan. Theexpectation of growth is one that Daiichi Sankyo agrees with.
"Naturally, as our home market, the Japanese domestic marketis very important to Daiichi Sankyo. As in many countries, there are pressureson healthcare cost and so on, but overall we see the future of thepharmaceutical market in Japan as being bright," says Tamae. "Regarding thevaccine market in particular, due to the Japanese government's strong supportof market growth in terms of the introduction of foreign, innovative vaccines,there is great expectation for continued market expansion in the future."
The transaction is expected to be complete in the thirdquarter of this year, subject to local regulatory approvals.