A New Pre­scrip­tion for Asia’s Top Drug­maker

▶ Takeda tar­gets drug cat­e­gories with global ap­peal ▶ Most “new mol­e­cules dis­cov­ered to­day are not by Big Pharma”

Bloomberg Businessweek (North America) - - Companies/ Industries - �Natasha Khan

For much of its his­tory, Takeda Phar­ma­ceu­ti­cal was a Ja­panese suc­cess story, be­com­ing Asia’s largest drug com­pany and a global force on the strength of medicines such as Ac­tos, once the world’s No. 1 di­a­betes medicine. No longer.

Ac­tos lost pa­tent pro­tec­tion in 2012, as have other Takeda stal­warts over the past decade, and the com­pany’s 5,000 sci­en­tists have pro­duced few win­ners to take their place. The drug­maker’s earn­ings hit a 15-year low in the fis­cal year ended March 2014. And while Takeda once counted on strong de­mand for its branded drugs in its home mar­ket, that’s chang­ing as Ja­pan’s govern­ment em­braces cheaper gener­ics be­cause of bud­get con­straints. Much of the ac­tion in phar­ma­ceu­ti­cals is also shift­ing from ma­ture economies such as Ja­pan to­ward emerg­ing mar­kets, where drug sales are grow­ing much faster.

With about 1.78 tril­lion yen ($15 bil­lion) in an­nual rev­enue, Takeda ranks 18th among the 20 largest pharma com­pa­nies world­wide. “Ten years ago you could be a lead­ing global com­pany by just be­ing big in Ja­pan, be­cause the do­mes­tic mar­ket was so big, but to­day it’s im­pos­si­ble,” says Christophe We­ber, the French­man who last year be­came Takeda’s first for­eign chief ex­ec­u­tive of­fi­cer.

We­ber, a 20-year vet­eran of Glax­osmithk­line, joined Takeda in

2014 as chief op­er­at­ing of­fi­cer be­fore tak­ing the top job last April. In re­cent months, he’s filled key ex­ec­u­tive po­si­tions with ex­ter­nal hires from in­ter­na­tional ri­vals. To re­vive re­search and de­vel­op­ment, he hired an Amer­i­can, Andy Plump, from French drug­maker Sanofi to be chief med­i­cal and sci­en­tific of­fi­cer. To men­tor lo­cal tal­ent, We­ber has be­gun host­ing lead­er­ship pro­grams. He also holds reg­u­lar con­fer­ence calls with his 300 top man­agers, giv­ing them di­rect ac­cess to the CEO, a prac­tice not com­mon in Ja­pan.

In Novem­ber, Takeda an­nounced a joint ven­ture with Is­rael-based Teva Phar­ma­ceu­ti­cal In­dus­tries, the world’s big­gest generic- drug man­u­fac­turer, to pool re­sources to boost sales of gener­ics in Ja­pan. And on We­ber’s watch, Takeda ended sev­eral years of lit­i­ga­tion by agree­ing to pay more than $2 bil­lion to set­tle thou­sands of law­suits in the U. S. that claimed the drug­maker had hid­den Ac­tos’s can­cer risks. (The com­pany de­nies it poses any risk.) It also sold a res­pi­ra­tory busi­ness to As­trazeneca for $575 mil­lion in De­cem­ber, so it could fo­cus on drugs for can­cer and gas­troin­testi­nal dis­eases.

While Takeda has in­tro­duced six prod­ucts in the past two years, it has no sig­nif­i­cant late-stage ex­per­i­men­tal drugs in its pipe­line aside from a dengue fever vac­cine ex­pected to reach the fi­nal rounds of hu­man tri­als this year. “Andy Plump has a huge job ahead,” says Credit Suisse Group an­a­lyst Fu­miyoshi Sakai. “Clearly late-stage pipe­line doesn’t come cheap.” The com­pany may have to wait more than five years be­fore see­ing re­sults from its part­ner­ships, he says.

Cap­tur­ing in­no­va­tion from out­side com­pa­nies’ own labs is the big trend in pharma right now, and We­ber ac­knowl­edges the need for Takeda to look out­ward. “The ma­jor­ity of new mol­e­cules dis­cov­ered to­day are not by Big Pharma,” he says. “So we need to be very hum­ble in a way and say, ‘Yes, we will have in­ter­nal ca­pa­bil­ity, but we need to think ex­ter­nal as well.’ ”

In De­cem­ber the drug­maker be­gan a col­lab­o­ra­tion with Shinya Ya­manaka, the Ja­panese re­searcher who won a 2012 No­bel prize for his re­search on stem cells. Un­der the 10-year, $170 mil­lion pact, Takeda and the sci­en­tist’s re­search cen­ter will study the use of cell tech­nolo­gies to treat con­di­tions such as di­a­betes and can­cer. Takeda also an­nounced a part­ner­ship with Chicago-based Cour Phar­ma­ceu­ti­cals, which along with North­west­ern Univer­sity has re­searched treat­ments for celiac dis­ease, an im­mune re­ac­tion to eat­ing gluten. Plump says a num­ber of other tie-ups on new medicines will be an­nounced in the next six months.

He also says he doesn’t feel pres­sured to fill Takeda’s pipe­line im­me­di­ately, be­cause some of its new drugs, such as En­tyvio for ul­cer­a­tive col­i­tis, should give the com­pany a lift for “at least five years, as­sum­ing noth­ing aw­ful hap­pens.” Says Plump: “De­spite the fact that it’s ex­isted for more than two cen­turies and has been do­ing R&D for 100 years, it’s a new­born com­pany.”

The bot­tom line Drug­maker Takeda in fis­cal 2014 saw its worst earn­ings in 15 years and is now bring­ing in for­eign man­agers to help craft its fu­ture.

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