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A new sun rises for vaccines
April 2012
by Kelsey Kaustinen  |  Email the author


LONDON—If an ounce of prevention is worth a pound of cure, two companies' worth of prevention might be worth its weight in gold, and pharmaceutical giants GlaxoSmithKline (GSK) and Daiichi Sankyo are banking on that. The companies recently announced the signing of an agreement to form a joint venture together, one that is expected to result in the No. 1 vaccines company in Japan.
The joint venture, which will be based in Tokyo, will hold development and commercial rights for existing preventative vaccines from both companies, including vaccines for seasonal flu, human papillomavirus, rotavirus, mumps, diphtheria pertussis and measles rubella.
"This collaboration marks another step in our strategy to build our presence in key growth markets and will create the first and largest company dedicated solely to vaccines in Japan," Christophe Weber, president designate of GSK Vaccines, said in a press release. "We are very pleased to be partnering with Daiichi Sankyo, a highly regarded company and an established leader in Japan. Both companies have strong track records in commercialization and, in combination, will create further significant economies of scale in the development and distribution of vaccines in the Japanese market."
The two companies will form Japan Vaccine Co. Ltd., each selling their respective vaccines into the joint venture at agreed-upon prices, and will receive sales synergies. GSK and Daiichi will hold equal stakes in the joint venture and will split profits 50/50, with the partners equally splitting the minimum total cash investment of 100 million Yen (approximately $1.2 million) for start-up capital requirements. No additional financial terms were disclosed.  
Masaya Tamae, director of the public relations group in Daiichi's corporate communications department, says that the opportunity to partner with GSK was "extremely significant" for the company, adding that Daiichi has "high expectations that the partnership will prove fruitful in the roles it will take on, such as vaccine development, marketing and sales, as well as in other areas such as vaccine research and manufacturing."
"Moreover, we expect the company to contribute greatly to the group's business results, as well as improve our presence in the growing Japan domestic vaccine market," Tamae adds. "As a Japanese pharmaceutical company, we feel an acute responsibility to contribute to improved health and welfare in Japanese society, as well as to do everything we can to help protect people living in Japan from infectious diseases."
The location of the joint venture in Japan is a benefit for GSK as well, a company spokesman notes, as GSK already has "a strong presence in Japan in its own right." The company reported 28-percent growth in Japan in 2011 on an underlying basis, and the Japanese market, in addition to the U.S. market, "is one of the key pro-innovation markets where we are focusing our R&D efforts." The company feels that combining Daiichi Sankyo's history in the country with GSK's vaccine expertise together in the joint venture will "have a positive impact on public health in Japan."  
"There are many factors that GSK takes into account when deciding on whether to enter into a JV. The choice of partner, the development potential and how the venture will fit into our growing global vaccines development network were all important considerations," says GSK's spokesman. "Daiichi Sankyo meets all of these criteria and holds similar values and commitment to excellence and meeting public health needs to GSK, and emerged as the natural choice to partner with on this JV."
They went on to note that "Japan is emerging as a key driver of innovation in the pharmaceutical sector, and we expect this to translate into growth in the future as more companies focus their efforts in the region," adding that the pharmaceutical market has seen 5.6 percent growth in Japan. The expectation of growth is one that Daiichi Sankyo agrees with.
"Naturally, as our home market, the Japanese domestic market is very important to Daiichi Sankyo. As in many countries, there are pressures on healthcare cost and so on, but overall we see the future of the pharmaceutical market in Japan as being bright," says Tamae. "Regarding the vaccine market in particular, due to the Japanese government's strong support of market growth in terms of the introduction of foreign, innovative vaccines, there is great expectation for continued market expansion in the future."  
The transaction is expected to be complete in the third quarter of this year, subject to local regulatory approvals.
Code: E041202



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