Trade Analytics

Go Back

Sun Pharma buys 14 of Novartis's brands in Japan for US$ 293 mn

Livemint:  March 30, 2016

Mumbai/New Delhi: Sun Pharmaceutical Industries Ltd, the largest Indian drug manufacturer, has acquired 14 prescription brands from Novartis AG and Novartis Pharma AG in Japan for $293 million, the company said on Tuesday.

As per December 2015 data from IMS Health, the size of the Japanese pharmaceutical market was estimated at $73 billion, accounting for over 7% of the $1 trillion global pharmaceutical market.

According to the agreements entered into between the parties, a wholly owned subsidiary of Sun Pharma will acquire the portfolio consisting of 14 established prescription brands, which have combined annualized revenues of approximately $160 million, from Novartis.

Under the terms of the agreements, Novartis will continue to distribute these brands, for a certain period, pending transfer of all marketing authorizations to Sun Pharma’s subsidiary. The acquired brands will be marketed by a reliable and established local marketing partner under the Sun Pharma label; the local marketing partner will also be responsible for distribution of the brands, Sun Pharma said.

“Japan is a market of strategic interest for us. This acquisition marks Sun Pharma’s foray into the Japanese prescription market and provides us an opportunity to build a larger product portfolio in the future,” said Dilip Shanghvi, managing director, Sun Pharma.

Sun Pharma, which acquired Ranbaxy Ltd for $4 billion in 2014, has plans to raise up to Rs.12,000 crore through convertible debentures or a qualified institutional placement for expansion and acquisitions.

Till date, Lupin Ltd is the only Indian pharmaceuticals company to have a presence in the Japanese generics market, which currently accounts for 12% of its annual revenue. Lupin has made two acquisitions in Japan: Tokyo-based I’rom Pharmaceutical Co. Ltd in 2011 and Kyowa Pharmaceutical Industry Co. Ltd in 2007.

An ageing population and mounting health costs have prompted the Japanese government to try and increase the presence of makers of generic drugs, bringing the Japanese market to the attention of Indian companies.

“Japan’s rapidly ageing population—just over a quarter of the population was aged 65+ in 2013, up from 12% in 1990, and accounting for over 50% of the country’s healthcare costs—is expected to drive demand for pharmaceuticals in 2014-2018,” a 2014 Deloitte report said.

The state-funded National Health Insurance scheme covers every citizen in Japan. In 2010, as part of efforts to increase the penetration of generics, the government had launched a series of reforms targeting 30% of the drug market by 2014 and 60% by 2017, from 18% at the time.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.