ViewPoints: Strength of Yen set to drive continued M&A activity from Japan
May 21, 2012
Japanese pharmaceutical manufacturers have been no strangers to M&A activity over the past decade, and recent comments by Takeda indicate that little change can be expected. Deals have focused initially on consolidation in the domestic market and subsequently shaped by international acquisitions. Takeda – Japan’s largest player – suggested last week that it remains open to further overseas purchases, despite spending approximately $15 billion on acquisitions during the past two years (see Takeda open to further overseas acquisitions)
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Takeda’s stance can be read as a strategic protocol applicable to other leading players within the Japanese peer set, Decision Resources analyst Hiroshi Tashiro told FirstWord. Fuelling this trend is the strength of the yen against the dollar; a barrier to growth for Japan’s export-focused industries but a key factor in directing many Japanese companies towards a ‘buy’ rather than ‘build’ approach when it comes to overseas operations.
Pharma is positioned as a prominent sector when looking at such activity by Japanese companies in recent times. Despite encouraging market conditions, Tashiro expects acquisitions over the next five years to take on a more cautious approach, partially as a result of the considerable investment made previously. Companies who have previously made acquisitions to significantly enhance their ex-Japan operations will be now be focused on deals designed to enhance this infrastructure and western-market focused portfolios and pipelines, said Tashiro, adding that emerging markets also remain an area of growing importance to Japanese manufacturers as they look to keep pace with the high levels of investment made by US and European rivals in recent years.
Whether international acquisitions act as a panacea for the Japanese pharma industry remains to be seen. Domestic growth projections remain benign, shaped in part by austere pricing policies implemented by the government. Takeda’s short term challenges remain more universal in nature; M&A is designed in part to offset anticipated patent expiries for key product franchises.
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