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Sankyo and Daiichi set to continue Japanese consolidation

Published on 24/02/05 at 11:32am

Two of Japan's leading pharmaceutical companies Sankyo and Daiichi look set to merge later this year, accelerating consolidation in the country's industry.

The companies have denied that a final decision has been reached on a tie-up, but the merger of Yamanouchi and Fujisawa to form the new entity Astellas will make it increasingly difficult for the smaller companies to compete.

Sales growth at Sankyo and Daiichi has stagnated and a number of changing market dynamics - including a decline in Western companies licensing products to Japanese companies in their home market - means the companies are being forced to change their strategies.

Sankyo, currently Japan's second largest pharma company is suffering in particular from a weak pipeline and analysts Datamonitor say the merger will help the company broaden their coverage of therapy areas and boost salesforce presence in the all-important US market.

But Datamonitor warns Daiichi could lose out if a non-Japanese company seizes the opportunity to buy its potential merger partner.

"Sankyo's development pipeline potential, liquid resources and key sources of high-value revenues, such as hypertension treatment Benicar [olmesartan, known as Olmetec in the UK] forecast to generate revenues of $1.26 billion in 2010, make it an attractive target for a foreign pharmaceutical giant, potentially throwing overboard Daiichi's growth prospects through consolidation," an analyst said.  

Despite the general trend away from licensing deals with foreign firms, Sankyo has the rights to Sanofi-Aventis' blockbuster anti-clotting drug Plavix in Japan, where the drug is currently under regulatory review.

Datamonitor predict Astellas will establish itself as the biggest Japanese pharma company after Takeda by 2010, with a merged Sankyo-Daiichi in third place.

 

 

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