TOYAMA, Japan—Staking a claim in the fast-growing Japanesegeneric market, sanofi-aventis has established a new joint venture withNichi-Iko Pharmaceutical Co. Ltd., one of the Asian country's leading genericscompanies with expertise in manufacturing, development, and distribution.
Called sanofi-aventis Nichi-Iko K.K., the joint venture aimsto leverage both companies' strengths to provide the Japanese generic marketwith "high-quality and affordable pharmaceuticals, supporting the government'sstated objective of increasing generic penetration," according to thecompanies' May 28 announcement of the deal. sanofi-aventis K.K., theParis-based pharma's Japanese headquarters, and Nichi-Iko will hold 51 and 49percent of joint venture, respectively. In addition, sanofi-aventis willacquire more than 1.5 million shares, or 4.7 percent, of Nichi-Iko, to be issuedthrough a third-party allocation.
For sanofi-aventis, the main attraction to this deal was thefast-growing generics business in Japan, says Olivier Charmeil, senior vicepresident of the company's Asia Pacific and Japan units. Japan is the world'ssecond largest pharmaceutical market, with annual sales of approximately $91million. Around 8 percent of the country's prescription drug sales aregenerics.
Those figures are expected to grow by 2012 due to the expiration ofmajor drug patents, a rapidly aging demographic and wide-ranging governmentinitiatives to reduce healthcare spending. In particular, the Japanesegovernment is promoting the use of generics and has set a goal for generics toreach 30 percent of the total pharmaceutical market in volume—something thathas not gone unnoticed by Big Pharma. Other firms, such as Pfizer and Teva,have launched similar forays into Japan. sanofi-aventis has recently forgedalliances in other markets, like Mexico and Brazil, that hold more promise forbranded drugs than the United States and Europe.
"We are extremely pleased to establish this joint venturewith Nichi-Iko that will allow us to strengthen our leadership and develop astrong presence in the fast-growing generic market in Japan," Charmeil said ina statement. "This strategic agreement between Nichi-Iko and sanofi-aventiswill leverage both companies' respective strengths to meet the needs of medicalinstitutions and patients."
Nichi-Iko is one of Japan's fastest-growing genericcompanies—and the first generic drugmaker to be listed on the stockexchange—with 2009 sales reaching about $566 million. Founded in 1965, thefirm's main business is generic medicines, but Nichi-Iko also sellslong-established off-patent drugs. It manufactures its products at fivedomestic production sites.
"We are equally gratified to form this long-term partnershipwhich will enable us to combine Nichi-Iko's expertise in generic business inJapan and sanofi-aventis' resources," said Yuiichi Tamura, Nichi-Iko'spresident and CEO, in a statement. "This announcement will deliver a strongmessage of a new strategic alliance in the market, showing clearly ourwillingness to further expand the generic market in Japan."
The joint venture's first order of business will be to take overthe marketing and distribution rights in Japan for the anti-insomnia agentAmoban (zopiclone) from sanofi-aventis K.K. Amoban sales reached nearly $53million in 2009. The companies say they will also "explore additionalopportunities for the development of the joint venture in the generic market inJapan by combining Nichi-Iko's expertise in manufacturing, development, anddistribution of generics in Japan and sanofi-aventis' resources and globalportfolio of generics."
