$74m Biotech deal opens up Japan's market

British Biotech has taken a big step in completing world-wide distribution for its Marimastat anti-cancer drug with the announcement of a $74m (pounds 44.5m) development and marketing deal with Tanabe Seiyaku, Japan's eighth-biggest pharmaceuticals group.

In exchange for exclusive marketing rights in Japan, Tanabe will take on the Japanese development of the drug and make an initial payment of $7m, with up to $67m more depending on a successful launch. Biotech will also receive royalties on sales in Japan thought to be "significantly higher than 25 per cent".

Typically, Western companies doing deals in Japan are lucky to obtain royalties of 15 per cent, according to one broker.

Japan is the last big market still to be cracked by Marimastat. The drug is currently in phase III trials in Europe and North America, the last hurdle to what is hoped will be official approval and first sales in the West in around 1999.

Japan has around 2 million cancer patients, about a quarter of European and North American markets put together. But Biotech has always faced much greater obstacles in breaking into the market, given the requirement that new drugs must be tested on Japanese patients before receiving official approval. As a result, the group has been looking for a partner to help launch the product in Japan for some time.

A company spokeswoman said: "For a company at this stage of development, it would not be a very useful use of shareholders' funds if we went about setting up a subsidiary over there when we can work with an already established company."

Trials of Marimastat in human patients are expected to start in Japan next year and, if all goes well, brokers expect it to hit the Japanese market around 2002. Tanabe was chosen partly because it was more sanguine about the launch date for Marimastat than some of its rivals, which suggested the process could take up to 14 years.

The Osaka-based Tanabe, which dates its foundation to1678, had sales of $2bn last year. The group's best-known product is Cardizem, a cardiovascular drug launched in 1989 which is distributed in the rest of the world by Hoechst Marion Roussel and is said to be still the world's 18th best-selling pharmaceutical.

Separately, SmithKline Beecham announced that its Hycamtin treatment for cancer of the ovaries had received official EU approval. The drug is a second line of defence for patients with metastatic cancer of the ovary after the failure of initial or subsequent therapy.