Japan's drugmakers will sit out a wave of consolidation sweeping through the industry, focusing instead on integrating past acquisitions and smaller, bolt-on deals.
In recent weeks, Pfizer Inc (PFE.N) has paid $68 billion for Wyeth (WYE.N), Swiss Roche Holding AG (ROG.VX) is paying $46.8 billion for the 44 percent it didn't already own in U.S. biotech group Genentech Inc (DNA.N), and Merck & Co Inc (MRK.N) agreed to buy Schering-Plough Corp (SGP.N) for $41 billion.
Japan's top drugmakers, including Takeda Pharmaceutical Co (4502.T), still have cash after $16 billion worth of overseas buys last year, and are aided by a strong yen, but are more likely to seek only minor acquisitions to plug gaps in their development pipelines than chase big deals just to build scale.
"Major Japanese drugmakers will continue buying ventures to supplement in-house efforts to improve their pipelines," said Yasuhiro Nakazawa, a drug analyst at Mitsubishi UFJ Securities. "(But) they're through with mergers for economies of scale."
Analysts expect Japan's drugmakers to seek out acquisitions or partnerships, mostly overseas, as they look to reduce their dependence on a mature home market and extend their global reach.
Attractive biotechnology ventures, which can strengthen a drugmaker's pipeline, are mostly in the United States.
Last year, Takeda bought U.S. biotech firm Millennium Pharmaceuticals for $8.9 billion, while Eisai (4523.T) spent $3.9 billion on cancer specialist MGI Pharma.
Daiichi Sankyo (4568.T) grabbed a majority stake in Indian generic drug maker Ranbaxy Laboratories (RANB.BO), which gets around a quarter of its sales in the U.S., for $4.6 billion.
Astellas Pharma (4503.T), the only one of the top four not to have landed a major deal, withdrew a $1 billion hostile bid for CV Therapeutics (CVTX.O) on Monday after the U.S. biotechnology firm reached a deal with another suitor.
Astellas and Daiichi Sankyo were each created through mergers earlier this decade to ensure they had annual research and development budgets of at least $1 billion — a level thought to be necessary to compete amid rising safety standards and costs.