Israel’s Teva Pharmaceutical Industries and Kowa Co have announced that they have signed a deal to establish a generics company in Japan.

The joint venture, Teva-Kowa Pharma Co, in which each company will have a 50% stake, will become operational in 2009. Its aim will be to “leverage the marketing, R&D, manufacturing and distribution capabilities” of each firm to become a major player in the presently-small Japanese market and reach sales of $1 billion in 2015.

Shlomo Yanai, Teva's chief executive, said that "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 maximize the opportunity available”. He added that the JV’s objective is to provide the Japanese generic market, which is expected to double in volume in the next five years, “with high quality and affordable pharmaceuticals, supporting the government's stated objective of increasing generic penetration”.

His counterpart at Kowa, Yoshihiro Miwa, said the agreement “will enhance our efforts to establish a strong management platform to support diversified business operations” in the prescription, over-the-counter and generics areas. By combining their capabilities, “Kowa and Teva are creating a unique business model and a robust base in Japan's generic pharmaceuticals market”.

Japan is the second-largest pharmaceutical market in the world, valued at $80 billion, but at the moment generics represented only 5.7% in value or 16.9% in volume in 2006, according to data from IMS Health and the Japanese Generics Manufacturing Association.

However, last year the Ministry of Finance announced a plan to double generic utilisation to 30% by 2012.