Takeda Chemical Industries Ltd.: Lessons from a Japanese Pharma Major
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Case Details:
Case Code : BSTR074
Case Length : 20 Pages
Period : 2003
Organization : Takeda Chemical Ltd.
Pub Date : 2003
Teaching Note :Not Available
Countries : Japan
Industry : Auto and Ancillaries
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"Takeda is a strong competitor in the Japanese market, and is still seen as the benchmark in many respects for domestic and multinational companies alike."
- Mark Milton Edwards, Director (Business Development), AstraZeneca KK (Japan), Forbes Global, June 23, 2003.
Introduction
In mid-2003, Japan's largest pharmaceutical company, Chemical Industries (Takeda), invested an additional $2.6 billion in its wholly-owned US subsidiary, Takeda America Holdings. Industry observers following the strategies of Japanese pharmaceutical majors were expecting this move for quite some time now. They claimed that Takeda, like other Japanese pharmaceutical companies, was taking initiatives to increase its overseas presence to fuel its growth.
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Takeda's thrust on overseas expansion was being seen as a direct fallout of the rising competition within Japan from foreign firms like Pfizer and Merck. With this investment, Takeda seemed to be looking towards strengthening its R&D position in the US, the largest pharmaceutical market in the world. Takumi Yamagishi, a pharmaceutical industry analyst at Shinko Securities Co., a leading financial services provider in Japan, said, "The main purpose probably is to expand drug development in the US."1 Analysts felt that Takeda planned to use the fresh funds to expand its business by buying rights to other companies' drugs. A Takeda spokesperson, Seizo Masuda supported this view, "We are preparing for funding needs such as alliances and licensing of drugs."2
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Takeda America Holdings had till now sold only the drug Actos; the new development indicated that Takeda was planning to launch new drugs in the market through Takeda America Holdings. Commenting on this, John Wilson, an analyst at HSBC Asset Management Japan, said, "It means the business is expanding, that is why they might need additional cash. We knew from the sales of Actos that it is a growing company."3
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However, Takeda stated that its growth could slow down in the near future for two reasons. Firstly, some of its best selling drugs were maturing (i.e. the products had reached saturation), and therefore may not have high demand in the market. Secondly, the drugs which it was developing currently were not expected to be commercially available until after 2005. These issues could prove troublesome for Takeda as competition in the global pharmaceutical market had become very intense in the early 21st century. Analysts felt that there was a strong need for Japanese companies to spruce up their international research and development (R&D) activities to sustain growth. An industry observer commented, "Companies without a strong R&D product pipeline may not fail, but they will certainly lag behind and face an uncertain future."4 |
Takeda Chemical Industries Ltd.: Lessons from a Japanese Pharma Major
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