Bloomberg News

Gates Foundation Veteran Yamada Retools Drugmaker Takeda

May 31, 2012

Takeda Chief Medical and Scientific Officer Tadataka Yamada

Tadataka "Tachi" Yamada, chief medical and scientific officer of Takeda Pharmaceutical Co. Photographer: Kiyoshi Ota/Bloomberg

Tadataka “Tachi” Yamada led global health programs for Bill and Melinda Gates, oversaw GlaxoSmithKline Plc (GSK)’s research, was head physician at the University of Michigan and wrote gastroenterology textbooks. He now has an even bigger task: revitalizing drug development for a company that’s not found a blockbuster in 13 years.

In his first six months as chief medical and scientific officer at Takeda Pharmaceutical Co. (4502), Asia’s largest drugmaker, Yamada, 66, created a unit to move into the $25.3 billion global vaccines market and began contests to spur research ideas. He has also focused marketing on poorer nations, where drug demand is growing four times faster than in developed countries.

Yamada is pressing for change at Takeda because the Osaka, Japan-based company needs new discoveries to replace Actos, the diabetes pill that generated $4.8 billion in the year ended March 2011. That drug’s prospects have been diminished, though, as cheaper generics enter the market this August.

“Takeda has to build up its pipeline now,” said Atsushi Seki, a health-care analyst at Barclays Plc in Tokyo. “I’m hopeful Yamada will introduce global ways of managing R&D.”

Takeda is betting Yamada’s experience will help the 230- year-old firm better compete with Pfizer Inc. (PFE:US), Roche Holding AG (ROG) and Glaxo, and leverage off last year’s 9.6 billion euro ($12 billion) purchase of Swiss rival Nycomed that added customers in 42 more countries.

Sagging Profit

Flagging demand for the diabetes tablet and Nycomed acquisition costs will drag Takeda’s operating profit down 40 percent to a 14-year-low of 160 billion yen ($2 billion) in the year ending March 2013, the company said on May 11.

Actos, first sold in the U.S. in 1999, generated 20 percent of Takeda’s 1.51 trillion yen of revenue in the year ended March 31. Sales of the drug will plunge 66 percent to 100 billion yen in the current year, the company predicted.

Efforts to find replacements have met with disappointment. Takeda has lost more than half its market value since October 2007, when a cholesterol pill in late-stage studies failed safety tests and was later shelved. Marketing approval for alogliptin, the drugmaker’s most promising successor to Actos, has been delayed three years, held up by requests from regulators for more safety data. Its absence in the market helped Merck & Co.’s rival treatment, Januvia, generate $3.3 billion (MRK:US) last year.

Takeda has four experimental medicines from its own laboratories in final-stage patient studies in the U.S.: a novel diabetes pill, and treatments for prostate and blood cancer, and ulcerative colitis.

Coming Home

Over a 2-hour meeting at the World Economic Forum in Davos, Switzerland, in January 2011, Takeda President Yasuchika Hasegawa persuaded Yamada to lend his expertise to overhauling what he said was “a rather deadlocked” R&D effort. That suited Tokyo-born Yamada, who left Japan at age 15 and wanted to contribute to his mother country before retiring.

“He decided to give us a hand because he couldn’t stand by and watch while we struggled,” Hasegawa, 65, said in an interview.

Yamada, who was asked by Hasegawa to work at Takeda for at least four years, has made his first task trying to uncover hidden talent within the group’s labs. He introduced a contest in April 2011 in which researchers anonymously submit research proposals for grant money. The 25 best pitches, as voted by a panel of referees, are awarded as much as $50,000. Another, dubbed “beauty and the beast,” has staff voting for the best and worst ideas.

New Metrics

Yamada has also encouraged Takeda scientists to focus their work first and foremost on needed treatments, rather than the volume of potential drugs produced, he said.

“Meeting unmet medicals needs with innovative solutions is the only way you get paid,” Yamada said in an interview from the company’s Tokyo office.

Yamada recruited Rajeev Venkayya, a critical care specialist and former Special Assistant to President George W. Bush for Biodefense, from the Gates Foundation in January to helm an expansion of Takeda’s vaccines unit. The business, which supplies only shots for the Japanese market, is developing a four-in-one pediatric immunization using a novel polio strain and a vaccine for Haemophilus influnzae type b, or Hib.

People in low- and middle-income countries will eventually demand the vaccines used in richer nations, Yamada said. “The opportunity is clear,” he said.

The worldwide vaccines market excluding North America, European Union members and Japan, probably expanded 11 percent to $6.78 billion last year and will increase about 10 percent annually for the next five years, researcher Kalorama Information said.

‘Room for Others’

“They are large markets now and there is room for others,” said Bruce Carlson, publisher at Kalorama. Economic- and population-growth in emerging markets mean they have “strong pent up demand” for the vaccines sold in developed countries, Carlson said in an e-mail.

Yamada managed a $9 billion health fund tackling global killers such as AIDS, tuberculosis and malaria for the Gates Foundation, and helped negotiate lower prices for life-saving childhood vaccinations, said Bill Gates, the foundation’s billionaire co-chairman.

Bill Gates

“Tachi took us from being an organization of grant-makers to one with strategies focused on results,” Gates, 56, said in an e-mail. “At every turn he pushed his team to be innovative. He is able to think about the science and, at the same time, care deeply about the people we serve.”

Tokyo-born Yamada, a grandson of the first Japanese citizen to be fully trained as an American physician, studied medicine in the U.S. and became the chairman of internal medicine at the University of Michigan Medical School. His father, Tadayoshi, is a former senior managing director of Yawata Iron & Steel Co., which later became Nippon Steel Corp. (5401), Japan’s largest steelmaker. The younger Yamada was president of the American Gastroenterological Association and edited the Textbook of Gastroenterology before joining London-based Glaxo, where he was appointed chairman of R&D in 2000.

Yamada is one of eight senior executives hired by Takeda in the past four years. The others include Frank Morich, who led Bayer AG’s health-care unit; Deborah Dunsire, chief executive officer of Millennium Pharmaceutical Inc., which Takeda bought in 2008; and Paul Chapman, hired from Glaxo to head research.

Leading “an organization that’s becoming multicultural,” is an opportunity Yamada said he relishes. “I’m very Japanese still, but I can be a bridge to Western culture,” he said.

To contact the reporter on this story: Kanoko Matsuyama in Tokyo at kmatsuyama2@bloomberg.net.

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net


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