Long a quieter, locally focused industry, Japanese pharma giants are increasingly looking to the rest of the world for deals.
Japanese pharma companies have long avoided the splashy M&A deals of their American peers, instead opting for quiet innovation. But that trend has suddenly reversed—with Daiichi Sankyo’s booming antibody drug conjugate business putting it in the buyer’s chair for the first time.
But Daiichi isn’t alone, Stephen Barker, an analyst at Jefferies based in Tokyo, told BioSpace in an interview. All across Japan, pharma companies are becoming more active. Terumo bought U.K. organ transplant company OrganOx in August, and Otsuka, the largest Japanese pharma by revenue, has gone fishing around the world for assets, including Massachusetts-based autoimmune and rare disease company Jnana Therapeutics for upwards of $1 billion. Otsuka also inked a potential $613 million inflammation and immunology deal with the Swedish biotech Cantargia in September.
“The habit of acquiring outside assets,” typical of U.S.-based companies, “has spread to Japanese pharmas,” Barker said.
In a recent report, Barker and his peers highlighted the accelerating pace at which Japanese pharmas are going shopping for assets and whole companies, particularly abroad. Those pharmas are sizing up U.S. and European start-ups, the kind with well-developed pipelines in areas that the Japanese sector prioritizes, primarily in oncology but with emphasis on nervous system disorders.
Reminiscing on a research trip in the U.S., Maki Umemura, a historian at Cardiff University who has written extensively about the history of the Japanese pharmaceutical sector, reflected on what the long-term ramifications of the Japanese pharma industry’s newfound appetite for M&A might mean. “I talked with some people in Boston who thought they were the center of the biotech industry, and that’s true. But that won’t last forever.”
A ‘Magic Bullet’
Until now, Japanese pharmas have preferred to grow from within and mainly focus on selling to the Japanese market. Like many of the large corporations of the modern world, the Japanese pharmaceutical industry was launched out of World War II. The modern giants of the U.S. pharma industry grew rapidly through relentless business development.
“Large U.S. companies got there by merging with each other and then constantly acquiring,” Barker said.
Japan’s industry in the early years was mainly known for its strength in specific sectors, Umemura said.
“Japanese companies became very well known for antibiotics, they were considered a ‘magic bullet,” she said. Japan was the third country, after the U.S. and U.K., to become self-sufficient in producing penicillin, and research groups at Japanese universities discovered the first new novel antibiotic after penicillin and the first anti-fungal molecule.
Japanese universities have always had the scientific capabilities, Umemura said, but the Japanese economy simply didn’t have the resources to grow mega pharmaceuticals on the scale of Eli Lilly or Pfizer.
“The Japanese industry faces difficulty in raising funds,” she said. “There just isn’t the financial capital.”
But some specific events have given the industry a shot in the arm. After Shinya Yamanaka won the Nobel Prize for his role in creating induced pluripotent stem cells in 2012, there was an “extraordinary national drive” for biotech in Japan, especially in areas like regenerative medicine that touch on using iPSCs, Umemura said.
A more recent kick in the pants, Barker said, was the Jan. 2024 decision by the Tokyo Stock Exchange to publish a list of companies that were trading below their book value—meaning the stocks trades below the value of the company’s assets—in a kind of “name-and-shame” scheme to coax companies to pump up their valuations and bring more capital into the economy.
Meanwhile, Daiichi has been not-so-quietly making a name for itself via massive partnerships. The most fruitful so far has been with AstraZeneca, a relationship that began in 2019 with the antibody-drug conjugate Enhertu. Originally worth up to $8.5 billion in payments and milestones for Daiichi, the partners doubled down in 2020, adding another potential $6 billion for the next separate ADC. That resulted in Datroway, an ADC approved by the FDA in January this year for certain kinds of breast cancer.
Rather than add on with AstraZeneca, Daiichi stunned the industry in 2023 with a $22 billion partnership with Merck to develop and commercialize three other ADCs. In May this year, the partners pulled the biologics license application for one of those assets, patritumab deruxtecan, after it failed to improve overall survival in non-small cell lung cancer—but only after the FDA rejected a prior application. A few months later in September, the partnership scored with a Phase II win for another asset, ifinatamab deruxtecan, which elicited a 48.3% objective response rate in NSCLC.
Takeda, the largest Japanese pharma by market cap, has been more proactive than its Japanese peers over the years, building a roster of assets through business development. This includes the massive and surprising $62 billion acquisition of Shire in 2018.
But the company is a bit different from Daiichi and other more home-grown Japanese biopharmas, seeking revenue outside of Japan. Both Umemura and Barker pointed out that Takeda is heavily staffed with people from outside Japan in the C-suite, and could identify less as a Japanese company and more as a global company. Still, Takeda has been one of the more active Japanese national companies of late, spending over $12 billion in the last month alone. This comes amid a massive R&D shakeup for Takeda, which cut its entire cell therapy pipeline—a portfolio that took at least $1 billion to build—and likely more, given that the size of many of its investments was never disclosed.
East and West
Takeda is no longer an outlier as Japanese pharmas look for growth wherever they can. “The traditional Japanese market has been stagnant for some time and doesn’t hold prospects for growth going forward,” Barker said, “so companies are more interested in growing in markets outside Japan.”
The number of deals from Japanese healthcare firms has risen from just two in 2022 to nine this year so far—though the value of those deals in 2025 is only $3.8 billion, versus $5.2 billion in 2022, according to Jefferies.
“Active acquirers, such as Otsuka, and Terumo, have raised the pace at which they are acquiring outside assets, while Shionogi, Ono and Kyowa Kirin have started buying substantial assets as well,” the Jefferies analysts added.
Those companies are getting more and more aggressive. Daichii has promised to beef up its immuno-oncology pipeline with outside assets while building out AstraZeneca-partnered Enhertu in a seemingly endless number of indications.
Japanese pharmas have already found some prizes in the U.S., such as Astellas buying New Jersey-based ophthalmology drugmaker Iveric Bio for $5.9 billion in 2023; Ono getting Boston-based oncology specialist Deciphera Pharmaceuticals in 2024 for $2.4 billion, or Otsuka’s 2024 acquisition of the Boston-based biotech Jnana Therapeutics.
While Astellas’ and Ono’s buys came with late-stage assets or already-approved drugs, the purchase of Jnana showed M&A appetite even for early-stage companies. In that deal Otsuka got a Phase I molecule for treating phenylketonuria, as well as standing partnerships that Jnana had signed with Roche and Neurocrine for preclinical work in immune-mediated diseases.
Other companies on the radar, according to Jefferies, could include U.S.-based Immunocore, which has a late-stage pipeline of oncology assets in development, as well as the Spanish biotech Oryzon Genomics, with a mid-stage pipeline of candidates for oncology and neuropsychiatric disorders.
But, as Barker put it, Japanese pharmas are not just looking to the U.S. for new assets.
“They’re looking globally,” he said. Otsuka went to Switzerland in March of this year, paying up to $740 million for the ADC-maker Araris Biotech. Sumitomo, meanwhile, picked up oncology and women ’s-health-focused Myovant Sciences, based in Basel, for $1.7 billion in 2022.
“Technological superpowers wane over time,” Barker said. “I don’t know if Japan is just looking east or west, they look where the technology is available, that could provide a good partnership.”
