"Japan is in our sights as part of our strategy. I am pleased that we've taken a major step forward and we're adding an important growth engine for the coming years," Teva president and CEO Shlomo Yanai told "Globes" today by phone from Japan.
Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) and Japan's Kowa Company Ltd. have signed a agreement to establish a generic pharmaceutical company, Teva-Kowa Pharma Co. Ltd., in Japan. Yanai added, "For us, the joint venture is aimed at entering the Japanese market, which is the second largest generic market in the world. I'm optimistic, and I believe that that we can achieve our $1 billion goal even before 2015."
Teva and Kowa will each own half of the joint venture, which will become operational in 2009. According to IMS and the Japanese Generics Manufacturing Association, in 2006, generics accounted for only 5.7% in value ($4.6 billion) and 16.9% in pharmaceutical sales volume of Japan's $80 billion pharmaceutical market, the second largest in the world after the US. In 2007, the Ministry of Finance announced a plan to double generic utilization to 30% by 2012.
The Japanese sales target does not affect the targets in Teva's strategic plan to reach a net profit of $4 billion on $20 billion revenue in 2012. These targets might be raised following the acquisition of Barr Pharmaceuticals Inc. (NYSE: BRL). Yanai said, "Our strategic plan took into account the development of our business in the Far East, especially in Japan."
Kowa has $2 billion in annual sales, including $800 million in pharmaceuticals. The company's pharmaceutical business focuses on innovative and over-the-counter drugs.
"Globes": Why did you decide to set up a new generics company rather than acquiring Kowa or another Japanese company?
Yanai: "We thoroughly studied the Japanese market for a long time, and I visited Japan to examine things up close. We concluded that the best way to enter the Japanese market is through a strategic partnership with an important player. Later, we may also decide on other ways, including the ways you mentioned, but for now we decided on a strategic partnership."
Yanai said, "Combining Kowa's knowledge of, and established reputation within, the Japanese market with Teva's global leadership and expertise in generics should enable us to maximize the opportunity available in this important growth market."
Kowa president and CEO Yoshihiro Miwa said, "The strategic alliance between Kowa and Teva will leverage both companies' respective strengths to meet the needs of medical institutions and patients for high quality and cost-effective generic pharmaceuticals. Kowa and Teva are creating a unique business model and a robust base in Japan's generic pharmaceuticals market."
Teva closed at $44.61 on Nasdaq yesterday, it rose 1.1% on the TASE today.
Published by Globes [online], Israel business news - www.globes-online.com - on September 24, 2008
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