Teva and Takeda collaborate to tap into Japan’s generics market

Teva and Takeda are to merge their generics portfolios into a joint venture to maximise sales in Japan.

The country has one of the world's fastest-growing generics markets, and the two companies want to increase the profits from selling cut-price medicines through greater scale.

Generics currently represent around 47% of prescriptions in Japan, but the government wants to see that rise within the next five years to 80%, the level seen in the US and Europe.

However Japan's generics prices aren't as significantly cheaper to branded drugs as they are in Europe and America, and Japan's consumers remain unconvinced that generics offer comparable quality.

Now Israel-based generics giant Teva says its collaboration with Takeda, Japan's trusted home-grown pharma company, will help unlock the market.

IMS Health says the new push will see generics sales in Japan double over the next few years.

Teva will have a 51% stake in the new company, while Takeda will have 49 per cent. The venture will operate as an independent company with its own Board of Directors, Chief Executive Officer, and Executive Leadership team, and is expected to start trading in the second quarter of 2016.

"The new business venture will combine Teva's strong generics platform, portfolio and quality across the value chain with Takeda's leading brand presence and distribution capabilities in Japan," said Siggi Olafsson, President and CEO of Teva Global Generic Medicines.

"This unique combination will create a company ideally positioned to lead the high growth in the generic market in Japan, and is aligned with the Japanese government objectives to reach 80% generic penetration by the end of fiscal year 2020."

Both firms in are the midst of major business transitions. Teva is about to become even more dominant in the global generics market, with the purchase of Allergan's off-patent drugs for $40.5 billion.

Takeda, meanwhile, is in a hurry to re-shape its portfolios with patent expiries and safety problems hitting revenues. Diabetes drug Actos went off patent in 2011, but a $2.3 billion legal settlement regarding the drug's safety, that the firm paid out last year, dented its profits and reputation.

New chief executive Christophe Weber has outlined a vision of the company's future being in oncology, emerging markets and gastrointestinal medicines, such as Entyvio, which it forecasts could hit $2 billion in peak sales.

The new Teva joint venture looks likely to generate lots more revenue and extra profits, although the partners have not disclosed the terms of the deal.

Takeda's new multiple myeloma drug Ninlaro has just gained US approval. The drug is an oral, next-generation version of its big seller Velcade, which now faces early generic competition from 2017.