Pfizer, Mylan link up to compete in Japan's generic drug market

Major U.S. pharmaceutical companies Pfizer Inc. and Mylan Inc. announced Aug. 23 that they have agreed on a business tie-up in the field of generic drugs in Japan.

The two companies hope to draw on Mylan's rich inventory of generic drugs and Pfizer's worldwide brand name recognition and extensive sales network in Japan to market products in the country.

Generic drugs are those that have comparable ingredients, dosage and performance of brand-name drugs, but are marketed at 20-70 percent of brand-name prices after their patents have expired.

The government of Japan is promoting the use of generic drugs to help cut medical expenses.

"We believe the collaboration will result in a powerful generics platform that will be a leader in Japan in terms of scale, scope and quality," said Rajiv Malik, Mylan president, at a joint news conference with senior Pfizer officials in Tokyo on Aug. 23.

Mylan ranks third globally in the sales of generic drugs. It has an inventory of about 900 generic drugs, but has yet to win name recognition in Japan.

Pfizer, on the other hand, is the world's No. 1 pharmaceutical company and is well known in Japan. In Japan, Pfizer has annual sales of more than 500 billion yen ($6.4 billion), not far behind Eisai Co. and other major players. Pfizer began marketing generic drugs last year in Japan.

Generic drugs accounted for 23 percent of all prescription drugs in Japan in 2011, up from 17 percent in 2005.

A number of foreign-affiliated drug makers have recently joined the expanding market. These include Sanofi-aventis of France, which agreed on a capital tie-up with Nichi-iko Pharmaceutical Co., a major Japanese generic drug maker, in 2010. Israel's Teva Pharmaceutical Industries Ltd., the global generic-drug leader, set up its subsidiary Teva Pharma Japan Inc. this spring.

Small and midsize drug makers are players in the crowded generic drug market in Japan, and even the largest of them have modest annual sales of around 70 billion yen.

The successive entries of major players in the generic-drug market are expected to catalyze corporate realignments and hasten the departures of weak players.