September 11, 2012 / 6:02 AM / 5 years ago

Takeda eyes Russia growth with $96 mln drug plant

LONDON, Sept 11 (Reuters) - Takeda Pharmaceutical, Japan’s top drugmaker, aims to outgrow rivals in the Russian market with the help of a local manufacturing facility, construction of which has just been completed at a cost of 75 million euros ($96 million).

“It anchors us firmly as one of the leading pharmaceutical companies in Russia,” Frank Morich, responsible for all Takeda sales outside Japan, told Reuters.

Takeda put a big bet on emerging markets when it bought Swiss-based Nycomed for some $13 billion last year and the company is now the seventh largest drugmaker in Russia by sales.

“We want to defend this position and, if possible, extend it - and for this we need to be a serious player with a local production base,” Morich said.

IMS Health expects the Russian drugs market to grow by 11 percent annually between 2012 and 2016, while Takeda plans to outstrip that with annual growth of 15 percent over the same period.

Russia, along with Brazil, is Takeda’s most important emerging market, although the group is also ramping up investment in other developing markets, including China.

Emerging markets already account for 13 percent of Takeda’s sales, up from 3 percent before the Nycomed takeover.

Most multinational drugmakers have embarked on a similar push into emerging markets, raising some concerns among investors that profit margins could fall as the industry sells cheaper products in lower-income countries.

Morich, however, said he was confident that margins in these fast-expanding markets would grow.

“The margin in emerging markets is already pretty high in certain countries and in other cases we are working hard to make it go up,” he said.

Across the group, Takeda is targeting an increase in EBITDA (earnings before interest, tax, depreciation and amortisation) margins from around 30 percent currently to the mid-30s to 40 percent.

“We can’t do that without a significant margin contribution from emerging markets,” Morich said. ($1 = 0.7812 euros) (Reporting by Ben Hirschler)

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