Nichi-Iko rights offering to support production, biosimilar plans
This article was originally published in Scrip
The major Japanese generics firm Nichi-Iko Pharmaceutical is planning to raise an estimated JPY12.58bn ($123m) in total net proceeds from a new rights offering, with the new funds already earmarked for an array of capital investment and product development projects.
The stock acquisition rights program (commitment-type rights offering) for existing investors (excluding the company itself) will involve around 39.9m rights of 0.5 shares each, with an exercise price of JPY338 and subscription price of JPY322. The exercise period for general investors will be 14-24 January, with Nomura Securities acting as underwriter.
Nichi-Iko highlights the increasingly favorable wider policy environment for generics in Japan, where the government this year set a mid-term target of raising the volume share of such products to 60% of the total generic-substitutable market. In an updated pharma industry "vision" released in June, the ministry of health, labour and welfare also called on generic producers to ensure the stable supply of high quality products and to build capacity for biosimilars.
A major goal of the mid-term strategic investment program to be funded by the offering is therefore to increase internal production capacity to 10bn tablets annually, and to bring back more manufacturing in-house rather than relying on outsourcing, the firm says.
To this end, Nichi-Iko has already signed an agreement to acquire Astellas's Fuji production plant in Japan next April, and will spend around JPY2.4bn over the April 2014-March 2017 period upgrading this. A further JPY4bn will go towards a new technology development center at the site focusing on value-added formulations.
Over the same period, JPY2.5bn has been allocated to an expansion of Nichi-Iko's existing Yamagata plant in Japan.
biosimilars
With annual group sales closing in on the $1bn mark but still dominated by small molecule generics, Nichi-Iko has already started the development of several biosimilars through a licensing alliance with South Korea's Aprogen.
Outlining plans for the remainder of the new funds, the company says it will spend around JPY1bn by March 2016 to acquire additional development data held by Aprogen for biosimilar infliximab, plus some JPY2bn to clinically develop and commercialize this and other existing products in the US.
Following on from biosimilar infliximab and trastuzumab (also part of the Aprogen alliance), JPY1.7bn has been earmarked over April 2014-March 2017 to develop biosimilar versions of darbepoietin alfa.
Nichi-Iko acquired around 13% of the South Korean contract manufacturer Binex in October, with an eye on production and development of biosimilars for the local market (scripintelligence.com, 3 October 2013).
As far as other overseas expansion goes, Southeast Asia is seen as a priority along with the US, and the company has already signed several distribution and manufacturing alliances in the region, most recently in Vietnam (scripintelligence.com, 19 November 2013).