Gen-Probe Gets Japanese Cash Infusion

Chugai Pharmaceutical Co., one of Japan’s largest drug companies, will pay Gen-Probe $15.5 million to fund the development of 10 new medical diagnostic products during the next five years, Gen-Probe President and Chief Executive Thomas A. Bologna said Tuesday.

San Diego-based Gen-Probe also granted Chugai marketing rights for those products in Japan and a handful of other Asian countries. Gen-Probe retained marketing rights elsewhere in the world, but will pay a royalty to Chugai on future sales of the new products.

Gen-Probe will be paid the $15.5 million over five years to expand research into eight viral and two cancer diagnostic medical products, according to Gen-Probe President and Chief Executive Thomas A. Bologna.

Medical industry analysts on Tuesday described the R&D; funding agreement with a major Japanese pharmaceutical company as being somewhat unusual.

However, those analysts said that a growing number of U.S.-based biotechnology companies have forged similar marketing agreements in order to break into the Asian market for diagnostic and therapeutic drugs.

Marketing agreements with large Japanese companies are “the most normal way to do it because only a few large American companies have established (marketing capabilities) in Japan,” according to Jim McCamant, editor of the San Francisco-based Medical Technology Stock Letter.

The marketing agreements have grown more common because Japanese companies recognize that “smaller, entrepreneurial companies in the U.S. are on the cutting edge of biotechnology,” McCamant said.

The growth of marketing agreements with Japanese pharmaceutical and drug companies will be an “evolutionary, continuing process, rather than a revolutionary thing,” according to Michael A. Martorelli, a Philadelphia-based industry analyst with Janney Montgomery Scott. “The Japanese companies have not been as quick to sign these agreements as the Europeans, who began signing them in about 1983.”

The marketing agreements with companies in foreign countries give U.S. companies “access to markets that, taken together, can be as large as the U.S. market for certain products,” according to Martorelli.

“In return, the (foreign companies) get a window into a new technology and gain access to some university ideas they normally wouldn’t enjoy,” Martorelli said.