Takeda Pharma Ups Commitment to China

| About: Takeda Pharmaceutical (TKPHF)

Takeda Pharma of Japan (OTCPK:TKPHF), which bills itself as the largest pharma in Asia, has signed an agreement with China Medical City in Taizhou. The company’s China subsidiary will build facilities in CMC, including buildings for R&D, manufacturing and marketing of innovative drugs.

The company candidly admits it is playing catch-up in China. “We missed the boat several times in China,” said Yasuchika Hasegawa, President of Takeda, last year. “We are trying to catch the last boat.”

Takeda invested $150 million Takeda China, and the press release also said the subsidiary would have registered capital of $50 million.

In its new-found commitment to China, Takeda pledged to send the best technology and talent to the PRC, according to Haruhiko Hirate, Chairman of the Asian Region for Takeda. However, he said the goal will be marketing to the entire populace of China and production of drugs there. He did not mention R&D. Takeda has R&D facilities in Europe and the US, in addition to its native Japan.

In 2010, Takeda said it was targeting a 10-fold increase in revenues from China in the next five years. Revenues are currently $40 million. The company’s major difficulty, it said, was a 50% to 60% loss of its China sales force every year. To stem the exodus, the company hired Hirate, who had been with Merck (NYSE:MRK) in Japan. His goal is to bring the attrition rate closer to the 10%-20% level of its competitors.

Takeda is the manufacturer of Actos, the best-selling diabetes drug in the world. In China, Takeda shares marketing duties for Actos with Pfizer (NYSE: PFE). Takeda has just 170 sales reps in China, while Pfizer has 3,000.

Last year, Takeda Pharma was the successful (and only) bidder at an auction for the remaining 25% of its China JV, Tianjin Takeda Pharmaceuticals Co., Ltd. In operation since 1994, the JV produced revenues of $23.6 million in 2009.

In February 2011, Takeda announced it was starting a Phase III trial for alogliptin, a DDP-4 treatment for type 2 diabetes in China. The drug is already approved in Japan.

Disclosure: none.