Bloomberg

Takeda Pharmaceutical Co. is forming a partnership with Teva Pharmaceutical Industries Ltd. to sell generic drugs and certain off-patent medicines in Japan, seeking to expand jointly in the Asian country as the government pushes for use of more affordable treatments.

Teva has been active making deals in 2015. The company announced plans to buy Gecko Innovations and Mexican drugmaker Representaciones e Investigaciones Médicas SA. Teva has also agreed to purchase Allergan’s generic-drug business.

Teva, based in Israel, will own a 51 percent stake in the venture and Takeda, Japan’s biggest drugmaker, will have a 49 percent share, according to a statement sent to the Tokyo Stock Exchange statement Monday. The venture will work as an independent company and will start operations in the second quarter of 2016.

Japan’s aging population is driving demand for health care. The country’s spending on drugs, currently the world’s third largest, is expected to grow by three to four percent over the next five years, researcher IMS Health said in a report published this month. Spending on generics is expected to double as the government encourages their use, IMS said.

"As one of the fastest growing generics markets in the world, Japan is expected to continue its high growth driven by social requirements such as increased patients’ needs for stable supply of affordable high quality medicines and the Japanese government’s policy of reduction of healthcare expenditures," the two companies said in the statement. They didn’t specify which drugs would be sold by the venture.

Building a business in Japan has proved to be a difficult task for Teva. It made its first foray into the country through a joint venture with Kowa Co. in 2008, and in 2011 it bought Taiyo Pharmaceutical Industry Co. in a deal valuing Japan’s third-largest generics maker at the time at about $1 billion.

While the company does not disclose earnings for its Japan business, head of investor relations Kevin Mannix said at a conference last year that the company has about $700 million in annual sales and is the third largest generics distributor there. Teva has highlighted the need to boost profitability in Japan, where generics head Sigurdur Olafsson said the company’s margins are significantly lower than competitors’.

Takeda said last week that Teva’s blockbuster drug Copaxone for multiple sclerosis patients started sales in Japan.

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