Bain Capital acquires Mitsubishi Tanabe Pharma in US$3.4B deal

JAPAN – U.S. private equity firm Bain Capital has acquired Mitsubishi Tanabe Pharma in a deal worth 510 billion yen (US$3.4 billion).

The acquisition comes amid expectations of regulatory reforms in Japan’s pharmaceutical industry, which Bain believes will create new growth opportunities.

Mitsubishi Tanabe Pharma, headquartered in Osaka, specializes in developing drugs for central nervous system disorders, immuno-inflammation, and oncology.

The company has a global presence, operating in over a dozen locations across three continents outside Japan.

According to Ricky Sun, a partner at Bain Capital, Japan’s life sciences sector holds significant potential, especially as government authorities introduce measures to speed up the approval of innovative medicines.

“We see strong growth prospects and untapped opportunities in Japan’s pharmaceutical industry, particularly as regulators take steps to streamline drug development and approval processes,” Sun said in a statement.

Japan has long faced challenges in approving new drugs, with many treatments available in the United States and Europe yet to receive clearance in the country.

This delay has been particularly evident in the case of orphan and pediatric drugs.

In response, Japanese health authorities have been exploring ways to reform the approval system to ensure patients can access the latest medical innovations more quickly.

According to a source familiar with the transaction, the acquisition is being financed primarily through Bain’s Asia private equity fund and contributions from its global life sciences fund.

The source, who requested anonymity as the details were not public, confirmed Bain’s strong interest in expanding its footprint in Japan’s pharmaceutical sector.

The sale was a strategic decision for Mitsubishi Tanabe’s former parent company, Mitsubishi Chemical.

The company explained that it lacked the financial resources to provide the large-scale investment needed to strengthen Mitsubishi Tanabe’s research and development efforts.

The sale proceeds will focus on Mitsubishi Chemical’s core chemicals business, reduce debt, and improve shareholder returns.

Mitsubishi Tanabe has faced financial struggles in recent years. In the last financial year, its core operating income dropped 61% to 56.2 billion yen (US$370 million).

Private equity-led buyouts have gained momentum in Japan as companies restructure and sell off non-core businesses. Japanese authorities have been encouraging firms to enhance corporate and shareholder value, leading to a surge in acquisitions by foreign investors.

Bain and other global investment firms have increased their activity in the region, driving Japan to the top of Asia’s mergers and acquisitions market in 2024—the first time since 1999 that the country has led in inbound deals.

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