Osaka-based Shionogi & Co. has announced plans to acquire two pharmaceutical subsidiaries of Japan Tobacco Inc. (JT) for ¥160 billion (US$1.1 billion) in a strategic move to bolster its global research and development capabilities. The acquisition targets include Torii Pharmaceutical Co. and Akros Pharma Inc., representing a significant consolidation in the Japanese pharmaceutical landscape.
The two companies have been in negotiations since early 2024, with the deal structured as a tender offer set to commence on June 18. According to information provided to BioWorld, the offer price is set at ¥6,350 per share with the aim of acquiring at least 11.89% of the minority stake currently not owned by Japan Tobacco.
Strategic Expansion of R&D Capabilities
This acquisition aligns with Shionogi's long-term strategy to enhance its research and development infrastructure while expanding its global footprint. Torii Pharmaceutical, established in 1921, has built a strong reputation in the Japanese market with a focus on dermatology, allergy, and urology products. Meanwhile, Akros Pharma, based in the United States, serves as JT's North American pharmaceutical development arm.
"This acquisition represents a significant step in our global expansion strategy," said a Shionogi representative. "By integrating Torii's established domestic presence and Akros's international development capabilities, we aim to accelerate our pipeline development and strengthen our position in key therapeutic areas."
Market Impact and Industry Context
The pharmaceutical sector in Japan has been experiencing increasing pressure to consolidate and expand internationally amid fierce global competition and rising R&D costs. This transaction represents one of the larger domestic pharmaceutical acquisitions in recent years.
For Japan Tobacco, the divestiture of its pharmaceutical subsidiaries signals a strategic refocusing on its core tobacco business. The company has been gradually restructuring its portfolio over the past several years.
Industry analysts view the deal positively for Shionogi, which has been seeking to diversify beyond its traditional antibiotic portfolio. The company gained significant recognition during the COVID-19 pandemic for its antiviral drug development efforts.
Financial and Operational Details
The ¥160 billion price tag represents approximately 2.5 times the combined annual revenue of the two subsidiaries. Following the acquisition, Shionogi plans to maintain the operational structures of both companies initially, while gradually integrating key research and commercial functions.
The tender offer period is expected to run for approximately 30 days, with the transaction likely to close by the end of Q3 2025, subject to regulatory approvals. Shionogi has indicated that it will finance the acquisition through a combination of existing cash reserves and new debt facilities.
Future Outlook
Upon completion, the acquisition is expected to be immediately accretive to Shionogi's earnings. The company anticipates that the expanded R&D capabilities will accelerate its drug development timeline across multiple therapeutic areas.
"We expect to see synergistic benefits within 12-18 months of closing," noted a financial spokesperson for Shionogi. "The combined entity will have enhanced capabilities to address unmet medical needs both in Japan and globally."
The pharmaceutical industry continues to see significant M&A activity globally, with companies seeking scale and complementary capabilities to navigate increasingly complex regulatory environments and development challenges. This transaction positions Shionogi more competitively in this landscape, particularly as it seeks to expand its presence in international markets beyond its traditional stronghold in Japan.
