Sanofi-Aventis plans to buy 5 pct stake in Japenese generic drugmaker Nichi-iko

May 27, 2010 9:26 AM EDT

French pharmaceutical giant Sanofi-Aventis plans to buy a 5 percent stake in Japanese generics drugmaker Nichi-iko Pharmaceutical, for around 5 billion yen (about $56 million), further buttressing the intent of major pharmaceutical companies to enter the booming generics market through acquisitions, the Nikkei business daily reported on Thursday

The report comes a week after Abbot Laboratories Inc. acquired India’s Piramal Healthcare’s, healthcare solutions business, a leader in Indian generic business for $3.72 billion on May 21 and Teva’s acquisition of Ratiopharm in March 2010 for $5 billion . All of this underscores a paradigm shift in the strategy of large pharmaceutical companies from specialty drugs to generic.

The Japanese generic market has been surging due to a state plan to contain the cost of healthcare as country’s population ages and also a major portion of Japanese pharmaceutical products are currently off-patent, with many more to become so by 2012.

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The same shift in focus is echoed by key Japanese pharmaceutical companies, accentuated by Daiichi Sankyo’s buy of Ranbaxy for $4.6 billion and Japan’s biggest drugmaker Takeda Pharmaceutical’s plans to drive acquisitions in India.

Nichi-iko booked 54 billion yen in revenues for the year 2009; it gets nearly 6 percent of its revenues from generic drugs. The two companies also intend to share technology to manufacture new generic drugs and import Sanofi products into Japan, depending on regulatory authorization.

Nichi-iko shares went up in the market by 4.6 percent at 3,015 yen on Thursday.

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