Mitsubishi Pharma, owned by Mitsubishi Chemical Holdings, will hold the majority shares of the new business owning 56.4% of the new company.
Japanese pharmaceutical companies are increasingly entering merger agreements in a response to the Japanese government cutting the price of drugs and therefore triggering a decline in sales and profits in the domestic market.
Mitsubishi Pharma and Tanabe believe the acquisition will help to reinforce overseas business infrastructure and accelerate research and development of in-house products. Both companies said that for the company to become successful it would have to expand into the international market.
The companies said they expect to cut 1,000 jobs from their combined workforce by 2010 as a result of the acquisition. Tanabe and Mitsubishi Pharma’s combined research and development budget would now come to an annual 80 billion yen.
Tanabe’s best selling drug is the arthritis drug Remicade, licensed from Johnson & Johnson. Mitsubishi Pharma’s best-selling drug is Radicut, a medicine to protect tissue after a stroke.