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Astellas announces its new five year plan

Japan's second largest drugs manufacturer reveals growth strategy to counter loss of US patents for Prograf and Harnal

Japan's second largest drugs manufacturer, Astellas Pharma, has announced its new five-year mid-term management plan for fiscal years 2010 through to 2014, ending March 31, 2015.

The plan aims to provide a "concrete five-year course of action" to overcome the decrease in income arising from the expiry of the US patents for two of its mainstay products, Prograf (tacrolimus) and Harnal (tamsulosin), and accelerate growth to a new stage.

According to the new mid-term plan, announced on May 25, Astellas will pursue a therapeutic area strategy, a regional strategy and an R&D innovation strategy, while continuing to raise cost efficiency. 

The therapeutic area strategy will see the company strive to achieve leader position in the global overactive bladder market through the growth of Vesicare (solifenacin) and mirabegron (YM178), scheduled for application in Japan, the US and Europe in fiscal year 2010; maximise its Prograf business in the global transplantation market (it is seeking to have the drug approved in Japan for new indications, primarily autoimmune diseases such as rheumatoid arthritis), while accelerating development of further compounds in this area.

The company also plans to reinforce its development pipelines in the field of oncology through applying for new targets and the latest technologies, and to strengthen its marketing and product strategy function by constructing a sales organisation that is adaptable to product characteristics and regional differences.

As part of these initiatives, Astellas has agreed to acquire OSI Pharmaceuticals for $4bn. OSI developed the blockbuster cancer drug Tarceva (erlotinib) with Genentech (DNA) and co-markets the drug in the US with Genentech. International sales are handled by Genentech's parent, Roche. This acquisition will provide Astellas with a top-tier oncology business in the US and an expanded portfolio and pipeline. 

As part of its regional strategy, Astellas will strengthen its own sales network in emerging markets. It also aims to cover loss of sales for Prograf in the Americas through the growth of Vesicare, mirabegron, and new products such as Lexiscan (regadenoson), Mycamine (micafungin), Sumavel DosePro (sumatriptan injection) and Vibativ (telavancin), as well as expand its business in Latin America.

In Europe the company plans to further strengthen its position through the growth of Vesicare and Advagraf, as well as through the expansion of growing products, and in Asia it aims to realise dramatic growth through the enhancement of its sales organisation in the Chinese market.

To meet its ambitious objectives, Astellas has announced plans to hire 300 additional sales employees in China. Although the company did not disclose separate figures for China, its Asia revenues (including China) are expected to be $395m this year; a figure it wants to increase to $670m by the end of the first quarter in 2015. By doubling China/Asia revenues over the next five years, Astellas forecasts that its global revenues will rise by 17 per cent. 

The revenue targets named by Astellas were higher than analysts' forecasts, showing better than expected optimism.

Despite going off patent and facing generic competition, Prograf is currently performing above expectations. Analysts predicted demand for the drug would dwindle when Sandoz, the generic-drug unit of Basel, Switzerland-based Novartis, became the first company to sell copies of Prograf in the US in August.

"I didn't expect Prograf sales to turn around and increase," said Yasuhiro Nakazawa, an equities analyst at Mitsubishi UFJ Morgan Stanley Securities, in a telephone interview with Bloomberg Businessweek.

26th May 2010

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