Struggling Eisai looks for help in China with new generics deal

Eisai CEO Haruo Naito

Eisai's had a rough few years, but it's predicted an upswing in operating profit in the not-too-distant future. And to help it get there, it's struck a new deal in China.

The Japanese pharma announced a RMB 500 million ($78.2 million) agreement late last week to purchase Chinese generics manufacturer Liaoning TianYi Biological Pharmaceutical, which makes about 90 products to treat conditions including pain relief, intestinal disorders and diabetes.

The move will mean a boost in the world's second-largest pharma market for Eisai, which is in the midst of a restructuring after announcing 200-plus layoffs in April. Despite a slowdown in economic growth within the country, China's rapidly aging population and access-improving government policies are expected to keep its pharma market steadily expanding, the company pointed out.

Beyond that, the drugmaker expects generics--which make up the majority of prescriptions in small and medium-sized cities and hospitals in China--to experience even stronger growth, and with the buyout, it'll now be in a good position to provide them, it said.

Eisai can certainly use whatever lift its new pickup can provide. The company is still working to pick itself back up after patent losses on top sellers, including Alzheimer's drug Aricept. And recently, its new launches haven't come through the way the company hoped. Obesity med Belviq is up against multiple competitors in a slow-to-take-off obesity market, for one, while epilepsy therapy Fycompa has been stymied by a U.S. launch delay and German cost watchdogs.

Amid the turmoil, CEO Haruo Naito has said the company would be pinching pennies not just in the U.S. with the job-chopping drive, but elsewhere, too. In May, he said Eisai would reevaluate its investments in emerging markets such as Russia, Brazil and Mexico.

Meanwhile, Eisai isn't the only Japanese drugmaker to expand its generics footprint in Asia within the past week. On Monday, local rival Takeda unveiled a new joint venture with knockoffs giant Teva ($TEVA) in Japan.

- read the release

Special Report: Pharma's top 10 M&A deals of 2014