28 Mar Japanese biotech is booming and linked with Midwest
Earlier this year, I talked about merger mania in the Japanese pharmaceutical market. Another interesting trend is the growth of Japanese biotechnology. Though the Japanese were slow to participate in this industry, the country is rapidly gaining a leadership role.
According to a recent article in the March 2005 edition of PharmaVOICE, there are now an estimated 334 Japanese biotech start-ups with an average of 20 employees per company and sales of about $3 million each with average R&D expenses of $1.5 million.
PharmaVOICE estimates that Japanese biotech R&D spending represents about 3.18 percent of the country’s GDP (versus 2.59 percent in the U.S.). It is estimated that the value of Japanese biotech will more than triple from 2002 to 2005 and reach almost $5 billion.
This trend represents a radical departure from the traditionally risk-adverse Japanese culture. Some of the Japanese approach to biotech comes from strong roots in other non-pharmaceutical businesses such as fermentation technology acquired from the brewery industries (Kirin and Asahi) as well as the food industries (soy sauce and amino acids).
A good part of this initiative has been due to Prime Minister Junichiro Koizumi whose government was responsible for the 2002 Biotechnology Strategy Guidelines. These established a set of objectives for transforming biotech into a key economic driver.
The guidelines effectively doubled the national budget for biotech R&D programs and provide incentives to the private sector. They also helped to promote awareness to the general public and schools.
Part of this trend was under way in the late 1990s when the government changed the rules for technology transfer from universities and research institutions. For the first time, this allowed the transfer to private companies. Another important step took place in 2000 when the government allowed instructors at public universities to serve as directors of private companies.
The results have been an explosion in university-based spinout companies (not just in biotechnology), which have increased from 100 firms in 1997 to 800 in 2004.
JETRO (the Japan External Trade Organization) has made this one of its key initiatives. Under the leadership of director Washio, JETRO Chicago created the Kansai Midwest Biotechnology Initiative (KAMBI), which I have written about in prior years. It links up the Japanese Midwest with the U.S. Midwest.
Washio has just announced his transfer back to Japan to head up JETRO’s Tokyo offices.
His efforts here in the Midwest have been greatly appreciated in fostering the development of biotechnology between the two countries. I hope that this JETRO initiative in biotechnology continues with the fervor under Washio’s leadership, which helped unite biotech activities throughout the U.S. Midwest.
More Pharma Mergers
Though no pharma mega mergers have been announced in the first quarter of 2005, regional mergers seem to be in vogue. We have already seen what’s happening in Japan earlier this year. Last week, a pharma medium merger of note took place in Europe.
Like Japan, Europe is rife with medium-sized regional pharma players (many of which are owned by families).
Solvay, the Belgium pharmaceutical and chemical company, announced the acquisition of the French family owned pharmaceutical company Fournier Pharma for $2.1 billion. Fournier’s lead drug for cardiovascular disease, Tricor, is sold by Abbott Labs in the U.S. and has U.S. sales of more than $1 billion, according to a Wall Street Journal article on March 25.
Fournier has 3,340 people in 30 countries and markets its drugs in more than 80 countries.
Solvay has increased its market presence over the last few years via acquisitions. During the late 1990s, it acquired Chicago specialty pharma company Unimed. Unimed products Marinol and Androgel have driven Solvay’s sales in recent years. Like Japan, there are plenty of other regional European players that are ripe for acquisition. It will be interesting to see further M&A activity.
See you next week!
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