Bain buys Japanese pharma Mitsubishi Tanabe for $3.4bn

US investment group Bain Capital has agreed to buy Mitsubishi Tanabe Pharma for JPY 510 billion (around $3.4 billion), setting up one of the largest private equity buyouts in Japan's healthcare sector in recent years.

The deal, which includes Mitsubishi Tanabe's subsidiaries Medicago and Alpha Therapeutics, will provide much-needed investment to support the drugmaker's pipeline of drugs for central nervous system diseases, immuno-inflammatory disorders, and cancer, according to its parent company Mitsubishi Chemical Group, which revealed that it was exploring options for the business last year.

"With the advancement of therapeutic drugs and diversification of modalities, the disease areas with unmet needs are gradually shrinking," said Mitsubishi Chemical in a statement.

"Moreover, given that the possibility of success of drug discovery is not high, continuous additional investments are essential for enhancing [Mitsubishi Tanabe's] research and development capabilities and achieving further growth."

Bain is expected to take ownership of the pharma company in the third quarter of this year, and the transaction comes after another US private equity firm – Blackstone – had also been linked to a potential offer for the business.

Mitsubishi Tanabe's sales in the first nine months of its current fiscal year ending on 31st March came in at JPY 349 billion ($2.3 billion), which the company said was a JPY 11.2 billion increase on the same period of the previous year.

It attributed the increase to growth in sales of Radicava ORS (edaravone), its treatment for patients with amyotrophic lateral sclerosis (ALS) in the US, and Japanese sales of obesity drug Mounjaro (tirzepatide) licensed from Eli Lilly. However, those gains were pegged back by price cuts for medicines sold in the domestic Japanese market after National Health Insurance (NHI) revisions.

Ricky Sun, partner at Bain Capital, said: "We believe there are promising signs for growth and untapped opportunities in Japan's life sciences industry as government and regulators have launched several initiatives to accelerate the development and approval of innovative medicines in the Japanese market."

Mitsubishi Tanabe's international pipeline includes roluperidone for schizophrenia, which was rejected for approval in the US last year and is in phase 3 in Europe, a continuous pump formulation of levodopa/carbidopa for Parkinson's disease in late-stage development that would compete with AbbVie's recently-launched Produodopa, and selective melanocortin 1 receptor agonist dersimelagon, in phase 3 for porphyrias and phase 2 for systemic sclerosis.