Sun Pharmaceutical bullish on Japanese market as peers lose interest

Most Indian players have exited Japan over the past decade. Ranbaxy was one of the early entrants.

India’s largest drugmaker, Sun Pharmaceutical Industries, is expanding in the Japanese market when most of its peers have indicated they are not bullish on it.

Mumbai-based Lupin is Japan’s sixth-largest drug generics player but it recently said the annual price cuts imposed there had made the market unattractive. It would continue to grow there but only in single digit (in value terms).

There were also reports that Lupin was looking at selling its Japanese subsidiary, Kyowa. The company did not confirm any such development but it had earlier this year divested the Japanese injectables business to Neo ALA Co, wholly owned subsidiary of Abu Dhabi-based Neopharma Group.

Most Indian players have exited Japan over the past decade. Ranbaxy was one of the early entrants. It exited a joint venture with Nippon Chemiphar in December 2009. Dr Reddy’s Laboratories, Orchid Chemicals and Cadila Healthcare wound up their Japan business in the following years. They found it did not make enough strategic sense to stay invested in a highly regulated market, one where margins were comparatively lower than in other developed ones.

A senior official at a pharma firm that had exited its Japan business some years before recently described to Business Standard how the regulatory landscape in Japan has been changing. The government there wants nearly 80 per cent of the pharma market to be of generic drugs by 2020.

Sunnier

For Sun Pharma, however, its rest-of-the-world markets grew 49.1 per cent during the second quarter. Analysts said this was due to consolidation of Pola Pharma in Japan. Sun had completed its acquisition of Japan-based Pola last January, to strengthen its presence in the dermatology segment. Pola makes and distributes branded and generic products in Japan, the portfolio primarily of dermatology products.

Sun forayed into the Japanese prescription market in 2016 with the acquisition of 14 established prescription brands from Novartis. Why is it bullish on Japan, when others are wary of the price cuts there?

Business Standard