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Takeda's new $96 million plant in Russia is further proof of its expansive efforts to catch up in the BRIC countries. That is, the BRIC countries minus India. Chief Commercial Office Dr Frank Morich explains.
Last month Takeda announced the completion of its $96 million production plant in Yaroslavl, Russia, a project initiated by Nycomed prior to Takeda’s takeover of the Swiss company in 2011. The opening of the Yaroslavl facility is further proof of Takeda’s rapid, intense and expansive efforts to play ‘catch-up’ in the emerging markets, particularly the BRIC countries.
That is, the BRIC countries minus India.
In a chat with Pharm Exec, Takeda’s Chief Commercial Officer, Dr Frank Morich, explains further.
PharmExec: Why Yaroslavl?
Dr Frank Morich: This was a project started by Nycomed, who looked at several different locations before settling on Yaroslalv at the best one. The area is committed to the pharmaceutical industry, and offers strong, committed support from local authorities, good proximity to the local university and, through that, access to a skilled work force. Another Russian company also has a plant there, and, almost a stone’s throw away, Teva is constructing a plant. So Yaroslavl looks like the beginnings of a pharmaceutical cluster.
PharmExec: The Russian market is expected to grow at a CAGR of 11% between this year and 2016. You have ambitions to outpace this and grow at 15%. How far is that dependent on the regulatory climate not changing in Russia? I’m thinking of the mooted new coverage legislation, for example.
Currently, we know the dynamics of the Russian market very well but, of course, we have ongoing discussions about any potential changes in the model there. I don’t think we have a portfolio that is particularly prone to be affected by changes in the Russian market. But I agree something will happen; it’s just hard to predict what it will be and when it will come, so we are monitoring the situation very carefully.
Is this concentrated push forward in the emerging markets a sign of stagnation for Takeda in US and Japan?
No. But we are absolutely determined to take part in every kind of growth opportunity there is. Takeda has had a relatively narrow focus on the US and Japan in the past. And in Europe as a whole, the company was not really present. But with the Nycomed acquisition we can now participate in what is generally believed to be the fastest-growing area in pharma— the emerging markets, the BRIC countries. And we can focus on products that fulfill the basic needs of the emerging market population, which for the time being is branded generics. Branded generics are set to grow twice as much in the emerging markets — at least in China, Brazil and Russia — as in the US market. We’ve made a clear commitment with the Nycomed acquisition to participate in this growth.
You have strong plans for ‘BRIC’, but that appears to be a BRIC that doesn’t include India…
Nycomed did invest in a joint venture in India (Zydus Nycomed, an API plant that opened for business at the end of 2010) and in some R&D activities that we no longer need. But it had no commercial presence there. We are monitoring everything that is happening in the Indian market closely, including announcements that suggest the government will be supplying free generics in a couple of years’ time. But we’re not willing to spend a lot of money on an Indian acquisition; the multiples are outrageous. Indian companies are expensive and for the time being we are not willing to commit ourselves to an acquisition that is hard to justify.
Our Indian situation is not made easier by the fact that we don’t have a sizeable Nycomed organization on the ground there that we can rely on. So for now India is not at the top of my priority list. In the other BRIC countries, clearly it is our goal to be established as a top ten company.
After years of slow and steady progress, the last few years of expansion seems to have been frenetic for Takeda…
The Nycomed acquisition has been a tectonic shift for Takeda. We employ close to 30,000 around the world and now less than a third of them work in Japan. The addition of Euro 1.5 billion in emerging market sales has changed our picture significantly. Just one year into the Nycomed acquisition, Takeda as a company has changed quite a bit. It was basically an acquisition to play catch up. Takeda was years behind what other companies had started in the 90s. So we had to catch up as soon as possible.