And that's exactly what it's doing with a little help from a friend.
Pfizer and Mylan
The financial details weren't disclosed, but considering that their strengths are quite complementary, it's probably safe to assume this is a good deal for both Pfizer and Mylan. Much like Teva Pharmaceuticals
For Pfizer, it's important to have more drugs to sell than just the ones in its established products division because generics tend to be a low-margin business. The easiest way to make a decent profit is to make up for the low margins with higher volume as large generic-drug makers like Teva Pharmaceuticals and Novartis'
Mylan has the products to make it work, but growing a sales channel isn't easy. Using Pfizer's established infrastructure will help keep costs down, and the big pharma's name is likely more established than Mylan's.
Japan is a relatively untapped market for generic drugs, which encompass only a quarter of the drug use. In the U.S., generics make up more than 50% of drug sales by volume. And the Japanese government is behind a push to increase the generic utilization given its potential to reduce health care expenditures.
It's still generics, so don't expect sumo-sized profits for either company, but a few extra pounds of profit from the untapped market will help the bottom line nonetheless.
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Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Procter & Gamble. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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