Japan Pushes Pace of Investment in Southland Biotechnology Ventures
Having made inroads in San Diego real estate and resorts, Japanese investors are now pursuing a new target--biotechnology.
Over the last few years, Japanese companies, mostly industrial giants or conglomerates looking to diversify, have formed more than 40 business relationships with U.S. biotechnology companies, including San Diego-based Mycogen, Gen-Probe and Immunetech. Now Japan seems to be picking up the investment pace. Representatives from 12 Japanese industrial giants are wrapping up a four-city tour of the United States today in Los Angeles, where they will stage one-hour interviews with 29 American companies--including six from San Diego--with an eye to forming more research or marketing arrangements, perhaps even buying stock.
The first-of-its-kind “biotechnology mission” was initiated and arranged by the Japan External Trade Organization (JETRO), a quasi-government Japanese agency with offices in San Francisco, Los Angeles and other U.S. cities that promotes international trade.
Prospect of Big Bucks
American biotechnology companies have responded eagerly, attracted by the prospect of big bucks and access to Japanese markets.
In Hartford and Houston, for example, the first two legs of the trip, the Japanese group listened to pitches from 170 U.S. biotechnology companies, mission leader Akio Sato said Monday. The mission consists of representatives of Hitachi Chemical, Nippon Steel, Fuji Chemical Industries, Sumitomo Jukikai Environment and other major corporations in Japan.
Sato is an agriculture professor at Ibaraki University who formerly was head of the Japanese Ministry of Internal Trade and Industry’s biotechnology section.
On Monday, the mission took a daylong tour of five San Diego biotechnology companies and were hosts at a luncheon attended by representatives of several other local companies. The San Diego companies visited by the Japanese group were Synbiotics, Stratagene, Idec, Brunswick Biotechnetics and Quidel.
The 29 Southern California companies that are expected at the Biltmore Hotel in Los Angeles today for one-hour, one-on-one talks with the Japanese include San Diego-based LMD Laboratories, Bio 101, Microbio Resources, Stratagene, Quidel and Synbiotics.
Seeking Joint Ventures
In an interview at Synbiotics Monday, Sato said that the purpose of the trip was to explore joint ventures between U.S. and Japanese companies that would combine the strengths of each--the basic research advances of American companies, particularly in the area of recombinant DNA, with the applications and manufacturing know-how of the Japanese.
The Japanese see the stakes as huge, estimating the market for new biotechnology products to grow to $120 billion by the end of the century, up from about $50 million now. That market estimate includes not only new drugs but forestry, fisheries and agricultural products.
“This trip is not symbolic of increased interest in U.S. biotechnology (on the part of Japan) but rather an extension of interest,” Sato said through an interpreter. “However, this kind of mission with specific business in mind is the first one.”
The trip was also conceived to assuag the “complicated trade friction” between the United States and Japan by setting up an “exchange of technology,” Sato said.
Based on 1987 Tour
The four-city tour is patterned after a highly successful two-city “technology mission” in May 1987 when Japanese corporate officials visited San Francisco and New York, a trip also organized by JETRO. During that trip, several Japanese companies interviewed representatives from several hundred U.S. electronics firms looking to establish research and marketing relationships with the Japanese.
JETRO officials say last year’s talks were highly successful. Of the 194 “business discussions” conducted last year in New York, about 25% of them are expected to result in concrete business deals between U.S. and Japanese firms, said Shigeru Kikuta, a project director with the JETRO office in Tokyo.
Of the 161 contacts made in San Francisco last year, about 40% are “very likely” to lead to some sort of U.S-Japanese business combination, he said.
Similar Mission
In 1986, JETRO sponsored a similar mission that brought Japanese and U.S. electroplating companies together, said Wes Ervin, a project coordinator with the state Department of Commerce, which has promoted this and other Japanese missions. The Assn. of Biotechnology Companies, a U.S trade group, also helped arrange the visit.
Synbiotics President Ed Maggio said his company is interested in Japanese investment more as a means of gaining access to the Japanese market for its veterinary and human health products than to attract equity money.
But the Rancho Bernardo-based company has embarked on costly development of human therapeutic drugs based on monoclonal antibody technology. Synbiotics will have to establish relationships with several deep-pocketed industrial backers if the products are to reach fruition in about five years, Maggio said.
Synbiotics may try to establish relationships with Japanese as well as U.S. backers over the next 10 to 12 months, Maggio said. “This is an excellent chance to meet Japanese companies and establish credibility,” Maggio said.
