Anti-takeover tactics employed by German and French firms are far more versatile and effective than those of their Japanese counterparts. These include the policy of not going public, holding companies, pooling of voting rights, stable shareholders, main bank, dual class shares, limitation of voting rights etc. Even in the United States where shareholder primacy is the prevailing doctrine, defensive tactics are no less multifarious, ranging from numerous poison pills to the State anti-takeover statute which combined to reduce dramatically unfriendly takeover bids in the 90s. In sharp contrast, Japanese public firms find themselves much more vulnerable as cross-shareholdings are unravelled, the main bank loses its influence, and Anglo-Saxon institutional investors increasing their stakes.
In the United States and the UK hostile takeovers are justified on the alleged ground that they improve the value of the firm through displacement of inefficient managers and through effective allocation of managerial resources. This theory, however, has not been born out conclusively by empirical evidence. Anti-takeover defense does not lead ipso facto to poor management and corporate performance. On the contrary, it has enabled Japanese managers, freed from stockmarket pressures, to take significant risks of large initial investments and the ensuing long gestation period to pursue successfully the development of new products, technologies and markets. The economic rationale behind this approach is lower transaction costs, better use of firm-specific assets including human capital and concerted efforts to tide over financial difficulties.
The global market position thus gained explains why the Tokyo Stock Exchange registered throughout the 60-80s consistently higher returns to shareholders than its US counterpart. The product market has been and still is the most powerful and unequivocal means of discipline against management entrenchment. It is evident that the liabilities of Japanese interfirm relations include lack of transparency including poor investor relations, low return on assets due to nonperfoming human resources and physical assets, illegal and non-ethical managerial behvior in the absence of powerful regulatory agencies such as the US Securities and Exchange Commission, deficiency of the corporate governance system, and collusive government-business relations.
While extraordinary efforts are needed to remedy the system, Japanese managers have no reason to throw away the baby with the bath water.

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This study investigates why Japanese pharmaceutical firms did not experience any large scale M&A activities in the 1990s. By using the equation weighing the costs and effects of M&A, I analyze the possibilities of M&A of some twenty Japanese pharmaceutical firms and found that the large-scale firms in the mid-1990s could not enjoy higher efficiency in terms of “fundamental value. ” Although the advantage of large-scale firms had become clear in the late 1990s, the possibility of M&A had become less due to the higher stock prices of target firms. Possible combinations of M&A are limited to several large-scale firms or efficient firms.
In sum, M&A of Japanese pharmaceutical firms have been“ too few” in numbers and “too small” in scale in the past. Most of the M&A are “too late”due to high stock price. “Only a few” combinations will be available in the early 2000s.

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There has been no fundamental change in the structure of the Japanese pharmaceutical industry, which is comprised of a large number of medium-sized companies that are, with few exceptions, almost entirely dependent on the Japanese domestic market. There are only a few exceptions to this situation. This is in contrast to the US and Europe, where market share is concentrated among a small number of very large companies. Many US and European firms have established an international business base centered on both markets, which partly reflects a constant string of mergers over the last 15 years. As a result, the size difference between US/European firms and Japanese companies has widened dramatically. There are two important factors believed to be behind this difference. One is the uniquely Japanese management style based on an indirect financial system. The, other is the fact that business risks in the Japanese pharmaceutical market have been far smaller than those in the US/European market, due to Japan's unique drug pricing system and new drug approval process. However, the uniqueness of the Japanese market is disappearing rapidly, and business risks have greatly increased as a result of growing similarity with the international market. At the same time, the financial system is also changing rapidly to a more direct one, where the appraisal of the capital markets has begun to act directly in determining the cost of capital. The setting and execution of realistic strategies appropriate to each company's size and operating environment has become an urgent priority. The risks of doing nothing are higher than ever before, and further, it seems clear that as time passes, the strategic options remaining will become fewer and fewer.

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The past two decades have seen massive consolidation of the United States'health care industry. Today, four wholesales(McKesson, Bergen-Brunswig, Cardinal Health, and AmeriSource Health)control over 80% of the pharmaceutical distributions business. Five drug chains(CVS, Walgreens, Rite Aid, and Eckerds)control over 60% of the retail drug prescription business. With such large customers, pharmaceutical manufacturers have been placed at a competitive disadvantage to which they are finally responding with a vengeance.
Pharmaceutical firms have renewed their strategies through global consolidations to expand markets and reduce marketing and administrative costs, while tapping into the latest technologies for product discoveries and development through strategic alliances. The transformation of the pharmaceutical manufacturing industry is not complete, but the trends are clear. Restructuring to facilitate product development and to reduce operating costs will result in a new global leadership. For example, Glaxo and Burroughs Wellcome became Glaxo Wellcome in 1996. Zeneca and Astra became AstraZeneca in 1998. Other combinations like Novartis(the 1996 merger of CibaGeigy and Sandoz)and Aventis (the 1998 merger of Hoechst AG and Rhone-Poulenc Rorer)are competing for industry leadership.
Ten percent market share appears to be the ultimate goal, with Merck still holding about 7.5%, Aventis with about 6.7%, and Glaxo Wellcome, Pfizer, and AstraZeneca holding about 6% each. The Human Genome Project has spawned new firms that offer the latest development and management technologies to the large pharmaceutical firms. For example, Pfizer Inc. has agreed to collaborate with Incyte Pharmaceuticals Inc. to accelerate its gene sequencing work and analyze all gene sequences as potential drug targets. Incyte has filed patent applications covering about 50,000 individual human genes, and has obtained 453 patents on genes. Such alliances will stimulate the introduction of a whole new class of products in the coming years. Leaders of the future must have access to them.

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This article examines by means of Conjoint Analysis(CA)the health care choice available to Japanese people suffering from the common cold. CA is a stated preference technique that uses a survey and involves the hypothetical scenarios. Estimates obtained from CA might be biased because it is difficult to maintain the accuracy of the questionnaire under hypothetical scenarios. This article is the first attempt to evaluate the magnitude of the bias in CA, by comparison with actual behavior. Using information about people who actually have no health insurance, our empirical result shows that CA biases are around 12%.

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The Fukuoka prefectural government founded the Fukuoka Medical Network for Seriously Intractable Neurological Diseases(FIND-Net)in 1998 to improve the environment surrounding medical care for patients with seriously intractable neurological diseases. The coordinator of FIND-Net finds the available beds for the registered patients. This paper examined the activities of FIND-Net during the first 10 months. Fifty five percent of the entire number of presentations were rejected by the registered hospitals. Sixty percent of the registered hospitals did not give their support to FIND-Net.
Most counseling was given to patients with amyotrophic lateral sclerosis (ALS). In spite of the activities of FIND-Net, it is still difficult to provide beds for those patients requiring long-term care. The role and right of the coordinator should be defined more clearly in order to give support to FIND-Net. The analysis of economical incentive for registered hospitals willserve as a guide in making a public policy for treating those patients.

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Vol. 9 No. 4 p. 127

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