Following rumblings of a private equity bidding war late last year, Bain Capital has emerged triumphant on its quest to obtain Japanese drugmaker Mitsubishi Tanabe Pharma.
Bain is laying out 510 billion Japanese yen ($3.3 billion) to acquire Tanabe Pharma in a carve-out transaction from its parent Mitsubishi Chemical Group, the investment firm said Friday.
The deal, which is expected to close in 2025’s third quarter, will set up Tanabe Pharma as an independent company poised to benefit from Bain’s financial firepower and biopharma know-how, Bain said in a release.
In a notice issued Friday, Mitsubishi Chemical said it made the decision to sell Tanabe Pharma to help infuse the drugmaker with the cash and industry expertise it needs to grow.
“[W]ith the advancement of therapeutic drugs and diversification of modalities, the disease areas with unmet needs are gradually shrinking,” Mitsubishi Chemical said. “Moreover, given that possibility of success of drug discovery is not high, continuous additional investments are essential for enhancing [Tanabe Pharma’s] research and development capabilities and achieving further growth.”
Mitsubishi Chemical plans to use the proceeds from the deal—which will also transfer ownership of additional pharma subsidiaries Medicago and Alpha Therapeutic Corporation to Bain—to reduce debt and channel investments into its bread-and-butter chemicals business.
Through the transaction, Bain aims to support Tanabe Pharma’s buildout of an innovative drug development platform to help bring more cutting-edge therapies to Japan and other countries.
“We believe there are promising signs for growth and untapped opportunities in Japan’s life sciences industry as government and regulators have launched several initiatives to accelerate the development and approval of innovative medicines in the Japanese market,” Ricky Sun, a partner at Bain Capital Life Sciences, said in a statement.
Mitsubishi Tanabe Pharma operates commercial subsidiaries in Europe, the U.S., Korea and beyond, as well as a manufacturing facility in Indonesia, according to its various websites. The company employs about 5,000 people worldwide.
On the R&D front, Tanabe Pharma is currently running trials on a wide array of candidates across oncology, immuno-inflammation and central nervous system disorders. The company also dabbles in vaccines, as well as diabetes and metabolic disease, according to Bain’s release.
Word of a potential Tanabe Pharma sale first surfaced around September following a report in the Japanese financial paper Nikkei.
At the time, Mitsubishi Chemical deflected (PDF) the rumors but acknowledged that it was “continuously reviewing the ideal business portfolio of the entire group for all of our businesses, including the pharma business.” Tanabe Pharma’s parent company added that a potential divesture wasn’t off the table.
Bain, for its part, has been eager to sink its teeth into a Japanese pharma investment opportunity for several years now, Will Cozean, managing director at Bain Capital Life Sciences, said in an interview. And Tanabe Pharma in particular has long proved alluring.
“When you think about a platform like Tanabe, it was a very clear target for us,” Cozean said. “We felt that the combination of our ability to do corporate carveouts in the Japanese context, which we’ve done with our private equity team, but also be a catalyst for change on the innovation side, made this a very interesting thesis for Bain Capital.”
In terms of the timing of the deal, Japan’s drug regulator, the Ministry of Health, Labour and Welfare, has “unwound” some its previous guidance around sequential trials in recent years, Cozean explained. Previously, drugmakers often needed to run distinct phase 3 trials in Japan to gain approvals in the country.
These days, however, it's possible for drugmakers outside of Japan to secure approvals in parallel, assuming their global trials include a certain number of Japanese participants.
While Bain and Tanabe Pharma still need to lock in their overall strategy going forward, Cozean figures the deal will allow Tanabe to efficiently in-license products for the Japanese market by teaming up with U.S. and European biopharmas right when their assets are on the cusp of phase 3.
Additionally, given Tanabe Pharma’s strong sales presence in Japan, “we will 100% be looking at commercial-stage acquisitions or partnerships in order to build off of that platform,” Cozean explained.
During the first nine months of Tanabe Pharma’s current fiscal year, which wraps up on March 31, the company grew (PDF) sales by 3% to 349 billion yen (about $2.3 billion). In the U.S., the company sells the oral amyotrophic lateral sclerosis (ALS) drug Radicava, which was first approved by the FDA in 2022.
The company also benefited from Japanese sales of the type 2 diabetes drug Mounjaro, which Tanabe Pharma licenses from Eli Lilly.
Late last year, Mounjaro’s obesity counterpart Zepbound also snagged (PDF) a regulatory thumbs up in Japan. Under the company’s partnership with Lilly, Tanabe Pharma will take charge of sales and distribution of the dual GIP/GLP-1 agonist in its home country.
Editor's note: This story has been updated with comments from Will Cozean, managing director at Bain Capital Life Sciences.