Bain Capital has announced an agreement to purchase Mitsubishi Chemical Group’s pharmaceutical division, Mitsubishi Tanabe Pharma, for approximately 510 billion yen ($3.37 billion). This acquisition will enable Mitsubishi Chemical to concentrate on its core chemical operations.

Founded in Osaka in 1678, Tanabe Pharma specializes in treatments for central nervous system disorders, inflammation, diabetes, metabolic diseases, and vaccines. The company employs over 5,000 people worldwide. With Bain Capital’s support, Tanabe plans substantial investments in product development and external licensing and acquisitions.

Mitsubishi Chemical has been narrowing its focus on key areas like vehicle electrification, chip-making, and food production. This shift has included divesting non-core businesses over the past few years. The proceeds from the sale will be used to fuel growth, reduce debt, and enhance shareholder returns.

After making Tanabe a wholly-owned subsidiary in 2020, Mitsubishi Chemical sought synergies between its chemical and pharmaceutical operations. However, evolving industry landscapes hindered these efforts. Significant investments needed for Tanabe’s research and development weren’t feasible under Mitsubishi’s ownership. The company noted a shrinking number of diseases lacking existing treatments and the low likelihood of successful new drug discoveries.

Masa Suekane, a partner at Bain Capital Private Equity, expressed pride in partnering with Tanabe Pharma, highlighting its long history of delivering innovative medicines to Japanese patients.

The transaction, slated for completion in the July-September quarter, is part of a broader trend of foreign investment firms capitalizing on Japanese mergers and acquisitions. For instance, Blackstone acquired Takeda Pharmaceutical’s consumer healthcare business for 242 billion yen in 2021.

Mitsubishi Chemical’s pharmaceutical division accounted for about 10% of its revenue in the year ending March 2024. The company’s top-selling drugs include Radicava for amyotrophic lateral sclerosis, competing with Biogen’s Qalsody. Mitsubishi expects to record approximately 95 billion yen in gains from the sale. In the nine months ending December, the pharma business saw a 1.6% decline in core operating profit to 54.5 billion yen, while revenue rose 3.3% to 349.1 billion yen.