The bottom line of leading five Japanese pharmaceutical companies was under pressure during the financial year ended in 2014 on account of higher interest cost, adverse fluctuation in foreign exchange rates, stringent regulatory criteria for new drug approvals and severe policies to constrain healthcare expenditure. There net profit declined sharply by 16.2 per cent to Japanese ¥338.6 billion from  ¥404.2 million in the previous year with significant growth in interest burden and research spending. The higher investments in R&D will play key role in challenging situation. These players have been facing lower returns from innovative drug discovery and technological breakthroughs.  

The net sales, as per the Pharmabiz sample of 5 leading Japanese pharmaceutical companies viz., Takeda Pharmaceutical Co., Astellas Pharma, Daiichi Sankyo Co, Eisai Co and Chugai Pharmaceutical Co., increased by 10.7 per cent to ¥4973.9 billion during 2013-14 from ¥4493.8 billion in the previous year. Takeda has maintained its leading position with net sales of ¥1691.7 billion as against ¥1557 billion despite the drop in the sales of its leading products such as Candesartan and Lansoprazole. This was followed by Astellas Pharma ¥1140 billion, Daiichi ¥1118.2 billion, Eisai Co ¥600.4 billion and Chugai ¥423.7 billion.

The gross profit, after cost of sales, of these 5 companies improved by 11 per cent to ¥3375.5 billion from ¥3040.5 billion. The cost of sales of these companies increased almost 10 per cent to ¥1598.3 billion from ¥1453.3 billion. The gross profit of Takeda went up by 9.9 per cent to ¥1201.4 billion from ¥1093.2 billion.

The net profit of Takeda Pharmaceutical declined sharply by 27.3 per cent to ¥109.6 billion from ¥150.7 billion in the previous year due to lower sales in Japan of Actos and Blopress. Similarly, net profit of Daiichi Sankyo and Eisai Co declined by 19 per cent and 32 per cent respectively during 2013-14. Astellas Pharma also failed to improve its net profit.

The R&D expenditure, excluding Eisai Company, increased by 9.2 per cent to ¥798.5 billion from ¥731.4 billion. Takeda remained highest spender on R&D activities to ¥341.6 billion as against ¥321.3 billion in the previous year, which worked out 20.2 per cent to its net sales. Astellas and Daiichi incurred R&D expenditure of ¥191.5 billion and ¥191.2 billion respectively.

With challenging situation in world market, these companies are focusing on the penetration of a diverse portfolio of products and the swift increase of new product sales in a broad range of markets, and also on the steady progression of their extremely competitive late stage pipeline. Takeda is focusing its efforts on the successful launch of new innovative products within its portfolio, while in emerging countries, in addition to launching new innovative products, it aims to acquire and commercialize diverse portfolios tailored to local needs in order to achieve sales growth that exceeds the market growth in each region.

Takeda has acquired Inviragen Inc. of the US to advance its commitment to vaccines and global health. Further it concluded the agreement with its wholly-owned subsidiary, Takeda Bio Development Center Ltd, to transfer the current business to Takeda, to enhance oncology development functions in Japan.

Astella is focusing to strengthen its ability to generate innovative drugs. Its five focus therapeutic areas in research are urology, immunology and infectious diseases, oncology, neuroscience and diabetes mellitus (DM) complications and kidney diseases. The company established the 'Regenerative Medicine Unit' as a new organization that will specialize in research of regenerative medicine and cell therapy in April 2014. The company projected sales growth of almost 5 per cent to ¥1192 billion in 2013-14 and net profit growth of 16 per cent to ¥154 billion.

Daiichi Sankyo has decided to focus the R&D pipeline in cardiovascular-metabolic, oncology and frontier medicine as priority areas for drug development. It established Venture Science Laboratories (VSL) as part of ongoing efforts to cultivate an entrepreneurial biotech culture within the Group. VSL's activities will complement the R&D being undertaken by the Group subsidiaries Asubio Pharma Co Ltd, U3 Pharma GmbH, and Plexxikon Inc.  It received manufacturing and marketing approval in Japan for prasugrel for the indication of ischemic heart disease in patients undergoing perceutaneous coronary intervention.

Daiichi Sankyo has entered into a research partnership with US based ventures Virtici, LLC and Celdara Medical, LLC to investigate novel targets for drugs. Three companies will jointly perform discovery researches on novel first-in-class research seeds identified through the close links established by Viortici and Celdara Medical with academia in the US. It also singed a collaborative research agreement on a norovirus vaccine with UMN Pharma Inc. Daiichi has entered an agreement with Astellas in March 2014, that enables the companies to share compound libraries containing approximately four lakh selected compounds.

Eisai Co continues to make strategic and aggressive investments in R&D, which accounted for 21.7 per cent of total net sales in 2013-14 compared to 21 per cent in the previous year. R&D expenses increased mainly due to milestone payments following steady progress of late stage clinical trials and achievements related to collaborative research themes in key therapeutics areas of the Group, and a lump-sum payment related to acquisition of global development and marketing rights for the antiobesity agent loraserin.




Leading 5 Japanese Pharma companies