Mitsubishi Tanabe Pharma sold to private equity fund

The sale will affect its Korean subsidiary and potentially change the market

Parent company Mitsubishi Chemical sells Mitsubishi Tanabe Pharma to Bain Capital for KRW 4.9 trillion

Company plans to maintain existing businesses, but inevitable delays may be made in domestic licensing and reimbursement discussions

Korean subsidiary sales reach KRW 70 billion in 2023, trickle-down effect of global R&D expansion expected

The sale of Japanese pharmaceutical company Mitsubishi Tanabe Pharma to a global private equity firm is expected to bring changes to its Korean branch as well.

 

Although the company is being sold, it is not being sold by business unit, so its effect on the overall market is expected to be small.

 

Rather, the sales are expected to increase support for the company and add strength to its market expansion activities.

 

According to industry sources on the 11th, global private equity firm Bain Capital signed an agreement with Mitsubishi Chemical, the parent company of Mitsubishi Tanabe Pharma, to acquire Mitsubishi Tanabe Pharma.

 

The transaction is valued at approximately ¥510 billion (KRW 4.9 trillion) and will be in a carve-out transaction from its parent Mitsubishi Chemical Group.

 

Carve-out deals typically involve a company evaluating and selling off a specific business unit to raise capital and improve operational efficiency.

 

This involves creating a structure that allows the business unit to operate independently and then selling it off.

 

The advantage for investors is that a standalone business unit has greater growth potential and offers the opportunity to become more competitive in the market.

 

In fact, this transaction was reportedly decided by parent company Mitsubishi Chemical Group to improve management efficiency and focus on its core business.

 

Mitsubishi Chemical Group decided to exit its pharmaceuticals division as part of a reorganization of its business portfolio due to deteriorating profitability in recent years.

 

As the pharmaceutical division requires long-term investment due to its high research and development (R&D) costs, the group has reportedly decided to prioritize and focus on its core chemicals business.

 

Mitsubishi Tanabe Pharma has garnered attention for its successful sales of ALS drug Radicava in the U.S.

 

market, but the limited exclusivity period in the U.S.

 

until 2029 has raised concerns about the company’s long-term growth.

 

As a result, the company needed new investments and strategies to develop additional new drugs and expand its global reach.

 

However, there are predictions that the acquisition will not drive major change as it is not a spin-off.

 

Instead, the company’s focus will be on market expansion as a standalone company.

 

In this regard, Bain Capital has stated that it will acquire Mitsubishi Tanabe Pharma and strengthen the company's R&D capabilities, and support its global market expansion strategy.

 

“We will actively support Mitsubishi Tanabe Pharma to continue its innovation as an independent company and explore new growth opportunities,” said Bain Capital.

 

However, the sale is expected to have some impact on the Korean market.

 

Mitsubishi Tanabe Pharma Korea has been supplying various treatments in Korea and generated about KRW 70 billion in sales last year.

 

Pic of Uplizna

The company took active steps last year to secure new growth engines, such as starting the domestic marketing authorization process for the ALS (Amyotrophic Lateral Sclerosis) drug Radicava (edaravone) and initiating the insurance reimbursement process for the optic neuromyelitis drug Uprisna.

 

However, the sale may result in adjustments to its product supply schedule and new drug launch strategy in Korea.

 

Bain Capital and Mitsubishi Chemical plan to finalize the process in the third quarter.

 

Even if Mitsubishi Tanabe Pharma Korea’s business remains intact, there is a possibility of delays in approval and reimbursement discussions, given the administrative procedures.

 

“All the details that were shared internally, including the sales of the business division, were not much different from the global announcement.

 

So although the company’s name will change, I don't think there will be any major changes,” said an industry official.

 

He added, “However, as Bain Capital has expressed its intention to make aggressive investments in the pharmaceutical division, which has been suffering due to funding difficulties of its parent company, there are some positive expectations as well."