Takeda CEO Christophe Weber has a big ambition for its China business: to make the country its second most important market. But it’s a huge task that could take a long time to achieve—if it happens at all.
“There’s no reason in the long term China shouldn’t be our second-biggest business in the world,” Weber recently said in an interview cited by Bloomberg, adding that the company views China on par with the U.S. and Europe in research, new drug approvals and reimbursement.
China’s drug market, already the world’s second-largest after the U.S., is en route to reach $167 billion by 2020, according to a 2016 report by the U.S. Department of Commerce. But it has yet to live up to that ranking for most multinational pharma companies. Probably the only MNC that enjoys China as its second market is AstraZeneca, which just saw its quarterly sales there exceed $1 billion in the first quarter.
For Takeda, however, it’s likely to take a long time to boost its Chinese sales to rival its results in the U.S. and Japan, or even the U.K.
In fact, Takeda’s revenue from China has suffered in recent years. The numbers dropped from 66 billion Japanese yen ($585 million) in its 2015 fiscal year (April 2015 to March 2016) to ¥57.6 billion in 2016 and then to ¥49.6 billion in 2017. That’s compared with nearly ¥600 billion and ¥510 billion it posted from the U.S. and Japan, respectively. It means Japan, currently second on Takeda’s sales list, is worth ten times that of China.
Takeda is in the process of getting regulatory approvals to acquire Shire, and Weber told Bloomberg he’s optimistic about getting a Chinese nod for the megadeal. But incorporating Shire represents a mixed opportunity for Takeda’s China business.
On the one hand, Shire sells only three drugs in China right now, its hemophilia drug Advate, albumin injection Flexbumin and renal product Fosrenol. On the other, China is pushing for faster approvals of orphan drugs, a key Shire focus, allowing foreign clinical data directly into approval applications and offering conditional green lights based on limited data.
At the same time, Takeda’s China management team has gone through big changes. It saw two Greater China executives head out of the door in 2017 alone and just recently lost its China medical affairs lead. Under current Greater China chief Sean Shan, Takeda China was restructured into two departments, one responsible for its diabetes, cardiovascular and digestive drugs, the other a specialty pharma division focusing on its oncology portfolio.
During the company’s fourth-quarter earnings call in May, Weber conceded “our growth in China has been lower than what we expected,” while other emerging markets such as Brazil and Russia were growing at double-digit rates.
Despite the recent decrease, Weber did say the company is “very optimistic about rebounding in China” from 2018 onwards based on a few factors. The most important is new drug launches.
Takeda plans to launch seven new products in the next five years in China, he said at the time. “We are very pleased that we made a few years ago a dedicated investment to develop products in China for the Chinese market, and we are starting to reap the reward of that by launching new products in the future,” he said.
The Japanese pharma in May launched multiple myeloma drug Ninlaro in China, and is looking to get approvals for anti-inflammatory treatment Entyvio and stomach acid drug Takecab in the near future.