Marubeni Acquires Sumitomo's Asia Pharma Business in $480M Deal

In a significant move that reshapes the pharmaceutical landscape in Asia, Japanese conglomerate Marubeni Corporation has announced the acquisition of Sumitomo Pharma's operations in Asia. The deal, valued at approximately 72 billion yen ($480 million), will result in the creation of a new company that aims to become Marubeni's "pharmaceutical strategic platform" in the region.

Deal Structure and Financial Details

Marubeni will initially acquire a 60% stake in the new company, tentatively named Marubeni Pharmaceuticals Corporation, for 45 billion yen ($300 million). The agreement includes an option for Marubeni to purchase the remaining 40% stake from Sumitomo for an additional 27 billion yen ($180 million) after 2029.

The newly formed entity will encompass Sumitomo's existing operations in China and Singapore, which generated estimated revenues of 45.8 billion yen ($305 million) in 2024. Marubeni has set an ambitious target to boost sales to over 100 billion yen ($668 million) by 2029, leveraging Sumitomo's established presence in Southeast Asia and China.

Strategic Implications for Both Companies

For Marubeni, this acquisition represents a significant step in expanding its global pharmaceutical footprint. The deal complements Marubeni's previous agreements with other regional players, including China's Fosun Pharmaceuticals, Middle East distributor Lunatus, and Sub-Saharan Africa's Phillips Pharma.

Sumitomo Pharma, on the other hand, views this divestment as a potential turning point in its growth strategy. The company has faced challenges in recent years, including declining sales of its antipsychotic drug Latuda in the U.S. due to generic competition. This led to a restructuring plan that included significant layoffs, with 1,260 jobs cut in the U.S. as of mid-2024.

Sumitomo's Focus on North American Market

Despite the sale of its Asian operations, Sumitomo remains committed to its North American business. The company will continue to rely on three key products in this market:

1. Gemtesa - An overactive bladder treatment
2. Orgovyx - A prostate cancer medication
3. Myfembree - A treatment for uterine fibroids and endometriosis, developed in partnership with Pfizer

Sumitomo has recently taken legal action to protect Gemtesa from generic competition, filing three lawsuits against Apotex and Intas Pharmaceuticals.

Broader Industry Trends

This deal is part of a larger trend of pharmaceutical industry reshuffling in Asia. Other recent transactions include:

• AstraZeneca's acquisition of FibroGen's China business for $160 million, focusing on the oral anemia drug roxadustat.
• Bain Capital's purchase of Japanese drugmaker Mitsubishi Tanabe Pharma for 510 billion Japanese yen ($3.3 billion), separating it from parent company Mitsubishi Chemical Group.

These moves highlight the dynamic nature of the Asian pharmaceutical market and the ongoing efforts by companies to optimize their portfolios and geographical presence.