Japan's Oldest Pharma Firm to Be Sold to Bain Capital

このページを日本語で読む

Mitsubishi Tanabe Pharma, Japan's oldest pharmaceutical company with a 350-year history, is approaching a major turning point. Its parent company, Mitsubishi Chemical Group, has announced plans to sell the firm to American investment fund Bain Capital. The deal is expected to be finalized between July and September 2025.

'Fading Synergy'

This will be the first time the company, shaped by a series of corporate mergers, comes under foreign ownership. The decision reflects broader structural changes in the pharmaceutical industry.

"We were like a close-knit family, living under the same roof for many years," said Manabu Chikumoto, President of Mitsubishi Chemical Group. "Mitsubishi Tanabe was a dutiful child, and I'm deeply grateful." Tsukimoto expressed regret about parting with the company, which has remained profitable and consistently delivered strong results.

At the same time, he noted that the synergy between chemicals and pharmaceuticals had faded. He explained that the decision was based on the belief that Mitsubishi Tanabe's growth would be better supported under Bain Capital, which has a strong track record in healthcare investments.

Industry Legacy

Mitsubishi Tanabe traces its origins back to 1678, during the Edo period, when its founder, Gohei Tanabeya I, opened a medicine shop in Tosabori, Osaka. The company began importing medicines in the early Meiji era. During the Taisho period, it built a modern pharmaceutical factory to strengthen domestic production.

The company was incorporated in 1933 and later became known as Tanabe Seiyaku. Alongside Takeda Pharmaceutical and Shionogi, it earned a reputation as one of the "Three Greats of Doshomachi," a historic pharmaceutical district in Osaka.

In 2007, Tanabe Seiyaku merged with Mitsubishi Pharma, which had roots in Yoshitomi Pharma and Green Cross. The merger formed what is now Mitsubishi Tanabe Pharma. In 2020, it became a wholly owned subsidiary of Mitsubishi Chemical Group, then known as Mitsubishi Chemical Holdings.

*A lantern of Tanabeya medicine shop, hung under the eaves from the Edo period to the early Showa era. It is currently displayed at the Mitsubishi Tanabe Pharma Museum in Chuo Ward, Osaka City.*

Drug Discovery

Mitsubishi Tanabe has long demonstrated strength in drug discovery. Notable products include IMUSERA for multiple sclerosis, CANAGLU for diabetes, and RADICAVA for ALS (amyotrophic lateral sclerosis) in North America.

For the fiscal year ending March 2025, Mitsubishi Chemical Group's pharmaceutical segment (essentially Mitsubishi Tanabe) posted an operating profit of ¥65.4 billion JPY (around $455 million USD). This made a significant contribution to the group's overall earnings and reflected steady profitability.

However, the patent for RADICAVA, the company's main revenue driver, is set to expire in North America in 2029. This is expected to trigger a "patent cliff," leading to a sharp decline in revenue. The need to develop new flagship drugs is becoming increasingly urgent. The outlook remains uncertain, especially after the United States postponed its approval of a potential Parkinson's treatment.

"In-house drug development is the heart of a pharmaceutical company, but Mitsubishi Tanabe's pipeline doesn't look particularly strong," said Katsuhiko Ito, an analyst with prior experience at Yoshitomi Pharma.

He pointed to the challenges of operating a pharmaceutical business within a chemical conglomerate. "Drug R&D demands long-term commitment and massive investment. That's something executives from a chemical background may struggle to fully embrace. The so-called 'diminishing synergy' between chemicals and pharmaceuticals was likely just lip service."

Industry-Wide Struggles

Mitsubishi Tanabe is not alone. Other Japanese pharmaceutical companies, such as Sumitomo Pharma under Sumitomo Chemical, are also grappling with similar structural issues. The entire industry is going through a significant transformation.

Once considered a drug discovery powerhouse, with multiple blockbuster drugs generating over $1 billion in annual sales, Japan's pharmaceutical sector is now losing ground. The domestic market is shrinking, and biopharmaceuticals are reshaping the global landscape.

"Most drug categories have already been tapped out. What's left are the tough ones," said one industry insider. "It's a complete red ocean now."

Private Equity Concerns

The key question is whether Mitsubishi Tanabe can revitalize its drug discovery efforts under new ownership. Mitsubishi Chemical is optimistic, citing Bain Capital's strong record in healthcare investments. The group expects Bain to inject capital into new drug development and provide strategic support for global expansion.

Bain has expressed interest in exploring new growth opportunities by improving R&D productivity, commercialization, and pursuing strategic acquisitions. It has even hinted at a potential future IPO.

Still, concerns remain. Critics warn that the deal could follow the typical private equity model — boosting the company's valuation in the short term, then selling off shares for profit. Shigeru Mishima, president of Pharma Asset Research, cautioned that PE owners sometimes slash R&D budgets to squeeze profits from existing products.

"They treat the company like a disposable asset," he said. "That may not be the case this time, but for companies with weak development pipelines, the future could be grim."

With soaring R&D costs and a declining domestic market, Japanese pharmaceutical firms are being pushed to pursue global strategies. Fumiyoshi Sakai, a UBS Securities analyst specializing in pharmaceuticals, noted this trend. He added that as major drugmakers struggle to rebuild or strengthen their domestic operations, Bain's approach will be closely watched across the industry.

Whether Mitsubishi Tanabe can regain its edge in drug development and become globally competitive under Bain Capital will be a key test. This will be important not only for the company, but also for the future of Japan's pharmaceutical sector.

Author: Sarasa Shimizu, The Sankei Shimbun

このページを日本語で読む