TOKYO - Shionogi, set on global expansion, has rejected initial plans to expand into Europe, instead turning to emerging markets in Asia
Article reprinted from "PharmAsia News" - July 1, 2010
TOKYO - Shionogi, set on global expansion, has rejected initial plans to expand into Europe, instead turning to emerging markets in Asia.
Japan's relative importance has degraded in recent years as the pharma industry has turned to emerging markets like China and India, and Shionogi cannot be left behind. That's not a bit of editorializing - that's the word from Shionogi President Isao Teshirogi.
Speaking at Bio Expo Japan, Teshirogi told attendees that Shionogi has spent the last 10 years trying to turn itself from a mid-size domestic company to a global player. Like the rest of the industry in Japan, Shionogi is hoping to prevent becoming irrelevant in a rapidly changing environment.
And for Shionogi, irrelevance comes unless they can shift away from dependence on Crestor (rosuvastatin) royalties. Shionogi is 100 percent dependent on AstraZeneca for Crestor's ex-Japan sales. Teshirogi called AstraZeneca a "brilliant company," one that Shionogi is comfortable working with, but added that Shionogi is ready "to control our own destiny in the next five years."
Crestor loses patent protection in 2016, giving Shionogi a bit more breathing room than competitor Japanese companies facing major patent losses in 2011 and 2012.
Shionogi shares jumped June 30 on the announcement that Crestor's patent was upheld by the U.S. District Court, District of Delaware. In 2007, AstraZeneca filed patent infringement suits against eight generic manufacturers that had filed ANDAs for rosuvastatin along with Paragraph IV certifications of non-infringement. On the news of the court's decision, Shionogi's shares jumped from ¥1,719 on June 29 to ¥1,846 at the close of June 30.
To prepare for Crestor's patent loss, Shionogi initiated in April its third mid-term management plan, designed to expand and improve R&D productivity as well as broaden its global footprint in targeted markets.
While praising Shionogi's domestic R&D output, Teshirogi characterized the company's global deployment as weak to this point. "There is a huge gap between what we are doing domestically and globally."
As part of its R&D expansion, the company hopes to expand its R&D investment from ¥50 billion to ¥75 billion in five years. The company hopes some of that investment will go to advancing five compounds currently in Phase IIb studies.
The Shionogi president said the company is currently formulating its global expansion strategy and expects it to be released within the year.
While the details are still being hashed out, Teshirogi did say the company will rely on three global bases for development. Last year's acquisition of Atlanta-based Sciele gave the company quick access to the U.S., and Teshirogi acknowledged that Shionogi expects to launch a base somewhere in Asia.
"Three years ago, we thought Europe was our next market, but now we are set on Asia," Teshirogi said, citing the difficulties the company would face in establishing a sales force in Europe.
But the company's views on expanding its global development to Asia do not also extend to production.
Cheaper production costs brought many companies to countries like China, but Shionogi is taking a more cautious approach.
Shionogi has no plans to take production capabilities outside of Japan. Teshirogi told attendees there is no way to know how quickly, and to what extent, labor costs will increase in places like China. Rather, Shionogi is already confident with the quality of production occurring in Japan, and will keep its facilities in Japan.
At the same time, increased government investment into the pharma industry in countries like China has Teshirogi hoping for something similar in Japan. Compared to some of its Asian neighbors, Japan has not been as active in promoting and investing the pharma industry. "I would like to request [to the government] a scheme to invest in the industry," Teshirogi said, adding that external investments may be enough of an incentive for Shionogi to take additional facility expansion outside of Japan.
- Daniel Poppy
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