Entrée into the Orient

Mitsui acquires MBS and expands geographic base

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TOKYO – Mitsui & Co. Ltd. will acquire a 100 percent stake in MBS Co. Ltd., a wholly owned subsidiary of Mercian Corp., in what is being referred to as a "demerger" or absorption-type split. The two Tokyo-based companies have entered into a share transfer agreement in relation to the acquisition. MBS' share of Mercian sales was reported as $93 million in fiscal year 2010.

Among its diverse medical and healthcare businesses, Mitsui has more than 40 years of experience as a pharmaceutical contract manufacturing organization (CMO) and has built up relationships with pharmaceutical companies both within Japan and overseas through the supply of raw materials, says spokesman Noriko Okamoto of the company's communications division. Specifically, the company aims to assist with the material management of the pharmaceutical industry by taking advantage of its global access to the best suppliers and manufacturers worldwide, he says. Okamoto notes that MBS has been developing and improving its biomanufacturing processes for many years and has forged a unique position in the CMO industry.

"It is offering drug products, API or intermediates, of the best quality, mainly using its microbial and enzymatic processes," Okamoto says.

In addition to Mitsui's current CMO business, MBS will provide its manufacturing technology, which is required for certain specific molecules, as in cytotoxic compounds, and its enzymatic chemistry to make hyperactive molecules of high complexity. With that new technology in hand, Mitsui will explore the opportunity to apply that biochemistry to manufacture new drugs or generic APIs or intermediates.

On another front, Okamoto adds, through an affiliate company of MBS, Shenzhen Main Luck Pharmaceuticals Inc., Mitsui can take its first practical step into the Chinese pharmaceutical market. Currently Shenzhen manufactures and markets anticancer agents. Mitsui will assist their new operation either by introducing drug products from the Japanese market or procuring the requisite high-quality APIs.

Okamoto also notes there will be an expansion of the company's geographical markets to pursue major Western or Japanese pharmaceutical companies, regardless of whether new chemical entities or generics are involved in the development process.

"In the long run," he says, "MBS will have a chance to tap into the pharm-emerging markets where each medical environment needs more oncology drugs of the best quality. In addition to MBS' expansion, Mitsui will assist Main Luck to supply finished products to developed countries, including Japan, that meet global standards."

Mitsui, through MBS as a core company in its pharmaceutical CMO business, hopes to grow its CMO business by utilizing MBS' unique manufacturing technologies, know-how and development capabilities. Mitsui will also strive to increase the corporate value of MBS by expanding sales of MBS' leading products (anticancer agents) through Mitsui's global network, strengthening and developing MBS' manufacturing technologies by combining new technologies from other CMO companies, and introducing new pharmaceutical products and supplying raw materials to Main Luck. Moreover, Mitsui plans to expand its pharmaceutical business in China through Main Luck, which possesses business bases throughout China, Okamoto notes.

Mitsui provisionally plans to change the corporate name of MBS to MicroBiopharm Japan Co., Ltd. upon completion of the acquisition. The company is currently analyzing the impact of the acquisition on Mitsui's consolidated financial results for the fiscal year ending March 31, 2012.

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