Lupin in talks with Japan's Astellas, Shionogi to buy their off-patent drug brands

MUMBAI: Lupin, India’s third-largest drugmaker, is in talks with Japan’s Astellas and Shionogi to buy the off-patent medicine brands they have separately put on the block, two people aware of the development said.

The basket of drugs that Astellas and Shionogi are divesting could fetch each company about $100 million, the two senior industry executives cited earlier said, adding that for Lupin, their acquisition will result in a wider offering in the Japanese market where its sales last fiscal stood at Rs 1,364 crore, or 10 per cent of its global revenue.

Japan’s drug market is seeing a consolidation at the top and a decline in the share of smaller players. If Lupin is successful in any of the two bids, they will mark the Indian drugmaker’s third acquisition in the Japanese market.

A query sent by ET to Lupin’s spokesperson remained unanswered till the time of going to press.
Shionogi could not be contacted. Astellas declined to comment on the development.

Over the last decade, Mumbai-based Lupin has crafted a successful build up in the Japanese market, unlike some of its home-grown rivals whose attempts failed. It reaped benefits of an early mover in 2007 when it acquired a majority stake in its Japanese partner Kyowa. Four years later, Lupin acquired I’rom Pharmaceutical, a specialty injectables firm based in Tokyo.

In recent months, big Japanese names have focused on hiving off their off-patent brands and ploughing the proceeds into research for innovative compounds. In April, Japan’s largest drug maker Takeda and Teva, the world’s top generics company, gave final shape to their partnered venture —Teva Takeda Yakuhin — to expand operations into generics business.

Last month, as part of its strategy for off-patent drugs, Shionogi transferred a few oncology drugs to Nichi-Iko Pharma and sharpened focus on researching innovative drugs. "Shionogi has some more old products on its list to sell," another executive said.

By size, the $110-billion Japanese pharmaceutical market stands second only to the US, but unlike the US, which has adopted to generic drugs, consumers in Japan remain brand focused. However, the volumes for generic drugs is steadily growing, pushed by the government that has set a target of reaching 80 per cent generic penetration by the end of the decade. In value terms, an expert estimated the market to be $12-15 billion.

Generic drugmakers see the incremental moves of the government as an up and coming opportunity.

"Japan is a less understood fertile market. Acquiring brands is identified as the best way to make a foray. Those who start from scratch either fail or have a long runway to reach critical mass," an expert said.