Teva Pharmaceutical Industries Ltd. and Kowa Company, Ltd. announced that they have signed a definitive agreement to establish a leading generic pharmaceutical company in Japan.

The company, Teva-Kowa Pharma Co., Ltd. will seek to leverage the marketing, research and development, manufacturing and distribution capabilities of each company to become a broad based supplier of high quality generic pharmaceutical products for the Japanese market and reach sales of $1 billion in 2015. Each company will have a 50 per cent stake in Teva-Kowa Pharma, which will become operational in 2009.

"Combining Kowa's knowledge of and established reputation within the Japanese market with Teva's global leadership and expertise in generics should enable us to maximize the opportunity available in this important growth market," said Shlomo Yanai, Teva's president and chief executive officer. "Our objective is to provide the Japanese generic market, which is expected to double in volume in the next 5 years, with high quality and affordable pharmaceuticals, supporting the government's stated objective of increasing generic penetration. This strategic partnership is an important milestone in executing Teva's five year strategic plan, as it provides a robust platform for Teva to further strengthen its global leadership and establishes a strong presence in the Japanese market."

Yoshihiro Miwa, Kowa's president and chief executive officer, added, "I am delighted to be able to report this agreement with Teva, the world's top generic pharmaceutical company, which will enable us to offer high quality generic pharmaceutical products to patients in Japan. The strategic alliance between Kowa and Teva will leverage both companies' respective strengths to meet the needs of medical institutions and patients for high quality and cost-effective generic pharmaceuticals. For Kowa, this agreement will enhance our efforts to establish a strong management platform to support diversified business operations in the prescription, over-the-counter and generic pharmaceutical products areas. By combining our respective capabilities in a new company, Kowa and Teva are creating a unique business model and a robust base in Japan's generic pharmaceuticals market."

Japan is the second largest pharmaceutical market in the world, valued at approximately $80 billion (1$=100 JPY). Generics represent only 5.7 per cent in value (approximately $4.6 billion) or 16.9 per cent in volume in 2006 according to the IMS and the data from the Japanese Generics Manufacturing Association. In 2007, the Ministry of Finance announced a plan to double generic utilization to 30 per cent by 2012.

Teva Pharmaceutical Industries Ltd., headquartered in Israel, is among the top 20 pharmaceutical companies in the world and is the world's leading generic pharmaceutical company.

Kowa Company, Ltd. started operations as a cotton wholesaler in Nagoya in 1894 and has currently grown into a multinational Japanese company with approximately 50 affiliated companies. Kowa actively engages in various businesses from two main aspects: Merchandise which deals with daily commodities like textile goods, machinery, building materials and chemical products, and Maker which manufactures and sells innovative pharmaceutical products, OTC products, consumer healthcare products, electro-optical apparatus and information and communication systems.