Significant transformations are occurring within Japan’s leading pharmaceutical companies as they consider strategic alternatives to doing business in the U.S. Traditionally, Japanese companies, other than the four largest—Takeda, Daiichi Sankyo, Astellas, and Eisai, have focused on two major types of strategic transactions: in-licensing or acquiring a compound for the purpose of developing and marketing it in Japan and Asia with perhaps some type of copromotion right in the U.S., which is almost never exercised, and out-licensing in-house developed compounds after completing Phase II trials in Japan.
The in-licensing of U.S.-developed compounds to Japan is unlikely to change in any meaningful way as Japanese pipelines continue to weaken in spite of significant increases in domestic R&D investment. Japanese companies tend to lack critical mass and mainly focus on two or three therapeutic areas. They have always found it politically difficult to drop programs that have been championed by members of top management or influential community thought leaders. Loss of face is a greater consideration than loss of cash. In short, U.S. innovation is, and will continue to be, needed and valued.
Japan’s track record of out-licensing developed compounds to U.S. or global companies has been spotty at best. Alliances with larger pharmaceutical companies have far too often resulted in the Japanese company getting the short end of the stick.
One example is Shionogi’s 1998 license deal with AstraZeneca for Crestor®. Shionogi would be better off today if it owned 100% of an $8 billion drug in the U.S. alone. Partnering with a smaller specialty pharma is difficult given the tremendous cultural differences in addition to the conflicting short and long term objectives—U.S. companies typically dream of getting taken out at an enormous premium. Whereas Japanese companies dream of building a large global company that will be respected within society. These two wildly differing views of the world seldom result in a harmonious relationship. Faced with this “damned if we do, dammed if we don’t” scenario, a new model has begun to emerge.