Teva Pharmaceutical Industries Ltd and Kowa Co have signed an agreement to establish a generic pharmaceutical company in Japan, which will seek to reach sales of $1 billion in 2015.

The company, Teva-Kowa Pharma Co., will seek to leverage the marketing, research and development, manufacturing and distribution capabilities of each company to supply high-quality generic pharmaceuticals for the Japanese market, the companies said in a statement.

Israel-based Teva is the world's largest maker of generic drugs.Each company will have a 50 percent stake in Teva-Kowa Pharma, which will become operational in 2009.

"Combining Kowa's knowledge of and established reputation within the Japanese market with Teva's global leadership and expertise in generics should enable us to maximise the opportunity available in this important growth market," Shlomo Yanai, Teva's president and chief executive officer, said in a statement.

"Our objective is to provide the Japanese generic market, which is expected to double in volume in the next 5 years, with high quality and affordable pharmaceuticals, supporting the government's stated objective of increasing generic penetration."

Yanai said this partnership was an important milestone in executing Teva's five-year strategic plan, as it provides a platform for Teva to strengthen its leadership and establishes a strong presence in the Japanese market.

Japan is the second-largest pharmaceutical market in the world, valued at $80 billion. Generics represent only 5.7 percent in value or 16.9 percent in volume in 2006, according to IMS Health and the Japanese Generics Manufacturing Association. In 2007, the Ministry of Finance announced a plan to double generic utilisation to 30 percent by 2012.