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”
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.