Teva Pharmaceutical Industries ($TEVA) has positioned itself to ride Japan's shift toward generic drugs to significant sales. With partnerships and acquisitions, it has the local know-how and contacts to make and sell more drugs there. And now, the Japanese newspaper Nikkei says it plans to pump more than $200 million into new facilities to make sure it has the capacity it needs to realize that potential and even move on to China.
Citing Nikkei, Reuters reported that Teva intends to invest ¥20 billion yen ($203 million) to double its production capacity in Japan. The newspaper reports that Teva will see capacity grow to 9 billion pills a year by 2018. This is after Teva has already been ramping up its footprint in Japan. In May, the Japanese newspaper reported that Teva would pay ¥40 billion, or about $490 million, to buy Japan's third-largest generics producer, Taiyo. That followed the 2009 investment in generics maker Taisho Pharmaceutical through a joint venture with Japan's KOWA.
The new capacity will help the Israeli company tap Japan's shift from using mostly branded drugs as the government looks for ways to cut healthcare costs. Nikkei reported that Japan's generic-drug market is expected to expand by about 8% a year and reach ¥1.3 trillion yen ($13.2 billion) in 2017.
The ramp-up in Japan also will be used as a springboard to China, another market that Teva CEO Jeremy Levin has his eye on. In May, Levin said Teva was just the kind of company that could clean up in China. With its expertise in making and selling cheap drugs and a strong portfolio of respiratory treatments that are suited for a country with air pollution problems, he thinks Teva has just what China is looking for.
"Our portfolio more closely matches the needs of that nation than nearly any other company in the world," Levin said in May at the Reuters Health Summit.
- read the Reuters story