Zydus Cadila buys Nippon Pharma

Zydus Cadila is strengthening its base in Japan, the world's second largest pharma market. The company on Thursday acquired 100 per cent stake in Nippon Universal Pharmaceutical, a privately held company headquartered in Tokyo. Zydus officials, however, refused to divulge the acquisition amount.

CMD Pankaj R Patel said, "We had announced our intentions of being a long term player in this market when we set up our subsidiary last year. Going forward, I believe this acquisition will unlock value for us, as generic market in Japan is just opening up, and post-2010, we expect this market to be a major growth driver for our global business."

The Japanese generics market is valued at $3 billion and has tremendous growth potential, as it currently stands at 5 per cent of the total pharma market in Japan in value terms and 17 per cent by volume.

The acquisition will provide critical access to a ready manufacturing and marketing base as well as a strong distribution network.

Nippon reaches out countrywide to more than 4,000 hospitals and clinics. This is expected to give a fillip to the group's operations in a highly complex market dominated by the local pharma companies.

Moreover, Zydus will acquire new marketing authorisations (NMA) to cut short on development time and will also explore in-licensing agreements with other generic companies. With a sizeable number of products in its portfolio, the group will also be looking to expand the field force to cover new areas and customers in the medium term.

Zydus, which had set up Zydus Pharma Inc in 2006, to spearhead its foray into the generics market of Japan, will now be able to jumpstart its operations. Nippon provides an opportunity for the group to establish itself in Japan's rapidly evolving generics space. Zydus will be looking to leverage Nippon's strong relationship with key wholesalers, which spans over three decades.

The group has identified a new product development programme that will add at least 5-6 products each year to its portfolio and build a basket of 40-50 products over 3-4 years.

In this highly regulated market with high expectations in terms of quality and consistency of supplies, companies looking to consolidate their presence have found the acquisition route the most ideal one.