This important strategic report provides highly detailed analysis and product sales forecasts of 10 leading Japanese companies. Anyone wanting an insightful analysis of the companies which are shaping the Japanese industry and which present both threat and opportunity to western corporations need look no further.

.. This 400-page strategic report compares and contrasts the performance and prospects for leading Japanese companies and provides:

Unique sales forecasts by major product to 2010
Benchmarks and compares the 10 leading pharmaceutical companies
Critically appraises each company's research & development pipeline
Details corporate strategy and financial performance
Identifies the all-important strategic alliances

How well will the Japanese flagship pharma companies fair in the global pharmaceutical market of the future?

COMPANIES ANALYSED
Astellas Pharma
Chugai
Daiichi Sankyo
Dainippon Sumitomo
Eisai
Kyowa Hakko
Otsuka
Shionogi
Takeda
Tanabe

THE JAPANESE INDUSTRY IN CONTEXT
The Japanese pharmaceutical market is the second largest in the world, after the USA, accounting for over 10% of the total world market. In 2005, it was valued at around US$66.2 billion (¥7,068 billion) at consumer prices. This is equal to US$517 per capita, one of the highest per capita spending levels in the world.

Despite this, the Japanese pharma industry has been weakened by many years of government cost control and weak economic operating conditions in Japan. The industry relies heavily on the depressed domestic market - and has only latterly come to the realisation that exports may offer a lifeline - meaning Japanese companies have failed to compete successfully with their US and European counterparts. So much so that not one domestic producer features in the top 10 global pharmaceutical manufacturers.

The Japanese market is characterised by:
A rapidly ageing population which has burdened the healthcare system both in terms of funding and facilities and is of great concern for the Japanese government.

The fact that more drugs are prescribed in Japan than anywhere else in the world, although the 'overprescribing' by doctors for financial gain has been tackled by the authorities with the introduction of the 'Bungyo' system in a bid to stamp this practice out.

An awkward regulatory system, a slow approval process and cultural differences which have often put off some overseas investors, although recent legislation has attempted to address many access difficulties.

The government which continually putting pressure on the industry to limit excessive growth in medical expenditure, with the next set of biennial price cuts due in 2006. These measures are met with continuing animosity by the majority of Japanese companies.

All change - but is it too late?
After years of indifferent performances and an ageing product pipeline the Japanese industry is on the move. Recovery is painful. The mergers of Yamanouchi/Fujisawa, Daiichi/Sankyo and Dainippon/Sumitomo are indicative of a corporate restructuring many commentators feel has some way to run but which has fundamentally changed the Japanese industry. Many see the future for the Japanese companies will be based on innovative R&D and in export markets, notably China. However, the global market is increasingly competitive for funds and market share - how well the revitalised Japanese companies might fair in these harsh trading conditions is a concern to industry planners and investors alike.

This report is essential reading for industry and commerce
This important strategic report provides highly detailed analysis and product sales forecasts of 10 leading Japanese companies. Anyone wanting an insightful analysis of the companies which are shaping the Japanese industry and which present both threat and opportunity to western corporations need look no further.

Each company report provides Latest Results
A brief review of the latest report results
.
Executive Summary
At a glance understanding of the major trends and events affecting the company
.
Financial Analysis (current year)
Detailed P&L and investment review of the latest full year performance
.
Company Strategy
Where's the company going and how does it plan getting there?
Product/R&D Pipeline
Highly detailed monographs organised by therapeutic category. Also covers R&D strategy/pipeline and provides 5-year sales forecasts to 2010 for major launched products where available
.
Appendices
5-year financial assessment
Key corporate events
Key agreements
Infrastructure
Major pharmaceutical subsidiaries/joint ventures
Product index
Astellas Pharma
Astellas Pharma (Fujisawa and Yamanouchi) recorded consolidated net sales for the first nine months of fiscal 2005/6 of ¥678,848 million, a 2% increase over the same period in 2004/5. This result was negatively impacted by various factors related to the merger, including product transfers and divestiture of non-ethical pharmaceutical businesses, which combined to reduce consolidated net sales by approximately ¥29.2 billion. Sales of ethical pharmaceuticals rose by 2% to ¥653.2 billion and R&D expenditure amounted to ¥92,590 million, an increase of 3%.

Major Products Forecast to 2010
Gaster/Pepcid (Gastrointestinal)
Nasea (Anti-emetic)
Ketek (Antibiotic)
Cefzon (Antibiotic)
Lipitor (Cardiovascular)
Perdipine (Cardiovascular)
Hypoca/Cyress (Cardiovascular)
Micardis (Cardiovascular)
Protopic (Transplantation/Arthritis)
Starsis (Diabetes)

Key questions:
What short term financial impact on revenues will the merger of the two companies have?
Which 3 products for benign prostatic hyperplasia were launched in 2005?
To what extent will the ageing product portfolio affect revenues by 2010?
Which products will contribute most to the company's revenues to 2010?

Chugai
Chugai Pharmaceutical's net sales for 2005 were ¥327,200 million, an 11% increase over 2004. Operating income was up by 54% to ¥79,200 million, due to product sales increases and cost saving measures. Net income rose by 57% to ¥53,600 million, due mostly to extraordinary gains from milestone income from Roche related to co-development of Actemra.

Chugai's reliance on the tough Japanese market has led to a range of initiatives for overseas expansion. It is building an independent development and sales infrastructure in Europe and other overseas markets and formulating a marketing strategy that will establish an autonomous marketing network in the US.

Major Products Forecast to 2010
Rythmodan (Cardiovascular)
Alfurol (Bone Metabolism)
Epogin (Haematological)
Neutrogin/Granocyte (Haematological)
Sigmart/Ikorel (Cardiovascular)
Rituxan (Anticancer)
Tamiflu (Antiviral)

Key questions:
How will Chugai's independent global expansion plans square with Roche's ambitions?
What development will influence Epogin revenues positively?
What contribution will the anticancer Tarceva play in Chugai's future?
What is the launch profile for Chugai's late stage pipeline?

Daiichi Sankyo
For the nine months ended 31st December 2005, Daiichi Sankyo's net sales were ¥704,039 million. Operating income was ¥134,294 million and net income was ¥80,992 million. Research and development expenditure was ¥113,371 million and pharmaceutical sales were ¥606,349 million.

Major Products Forecast to 2010
Cravit (Antibacterial)
Omnipaque (Contrast agent)
Panaldine (Cardiovascular)
Artist (Cardiovascular)
Sunrythm (Cardiovascular)
Zyrtec (Anti-inflammatory)
Mevalotin (Cardiovascular)
Loxonin (Anti-infective)
Remacin (Haematological)
Acecol (Cardiovascular)
Banan (Antibacterial)
Espo (Haematological)
Carbenin (Antibacterial)
Gran (Anticancer)
Alesion (Anti-allergenic)
Olmetec (Cardiovascular)

Dainippon Sumitomo
In the first nine months of fiscal 2005, Dainippon Sumitomo Pharma's net sales rose by 5.6% compared to the same 2004 period, to ¥ 84.7 billion. Net income rose by 51.6% to
¥ 4 billion, whilst operating income rose by 113% to ¥ 9.0 billion.

Major Products Forecast to 2010
Klaracid (Anti-infective)
Meropen (Anti-infective)
Gasmotin (Gastrointestinal)
Ebastel (Anti-allergenic
Prorenal (Cardiovascular)
Almodin (Cardiovascular)
Zyrtec (Anti-allergenic)
Sumiferon (Hormone)
Growject (Hormone)
Tagamet (Gastrointestinal)
Excegran (CNS)
Almarl (Cardiovascular)

Key questions:
How might a negative outcome to Pfizer's demand that DSP stop manufacturing Almodin affect sales?
What is unique about Meropen?
Which cardiovascular product continues to show significant double digit growth?

Eisai
From April to September 2005, Eisai's net sales were ¥282,629 million, an 8% increase over the previous fiscal year's interim period, due to a rise in sales of Aricept (+18% to ¥89,991 million) and Pariet (+10% to ¥71,576 million). Pharmaceutical sales improved by 9% to ¥272,371 million. Operating income was up by 9% to ¥45,269 million, and net income also advanced by 9% to ¥30,158 million. Expenditure on R&D increased by 19% to ¥44,400 million.

Geographical sales were as follows: Japan (+4% to ¥139,576 million), North America (+11% to ¥113,958 million), Europe (+10% to ¥21,198 million) and Asia and others (+37% to ¥7,897 million) reflecting the fact that Eisai is less reliant on the Japanese domestic market than its competitors.

Major Products Forecast to 2010
Aricept (CNS)
Methycobol (CNS)
Pariet (Gastrointestinal)
Selbex (Gastrointestinal)
Glakay (Osteoporosis)
Iomeron (Contrast agent)
Myonal (CNS)
Azeptin (Anti-allergenic)
Nitrol-R (Cardiovascular)

Key questions:
What is the estimated value of leading drugs such as Aricept, Methycobol and Pariet over the 5 years to 2010?
What strategy is Eisai following for expansion?
What late stage products are due for launch in the next 5 years?

Kyowa Hakko
Kyowa has terminated, in March 2005, its Japanese marketing agreement with Janssen (J&J) for the oral antifungal, Itrizole (itraconazole). The move leaves Kyowa with just three key products. The loss of Itrizole gives Kyowa a huge short term headache as it accounted for 19.1% of total pharmaceutical sales in fiscal 2005.

The company is concentrating its core business in pharmaceuticals and has divested or restructured many of its non core food and chemical interests.

Major Products Forecast to 2010
Coniel (Cardiovascular)
Allelock (Anti-allergenic)
Celtect (Anti-allergenic)
Durotep (CNS)
Depakene (CNS)
Adriacin/Farmorubicin (Anticancer)
5-FU (Anticancer)
Nauzelin (Gastrointestinal)
Neu-up (Blood & Fluid)

Key questions:
What financial impact will the loss of Itrizole have in the short and medium term?
After years of decline, does the company's 2005 performance indicate a long term upward trend?
What is the launch schedule for the Parkinson's treatment istradeylline currently in Phase III trials?

Otsuka
In fiscal 2005, (YE 31st March 2005) Otsuka reported consolidated pharmaceutical sales of ¥434,100 million. Operating income totalled ¥65,865 million, an increase of 202.2% on the previous year, and net income totalled ¥37,025 million, an increase of 123.72% on the previous year.

Otsuka Pharmaceuticals has eight divisions in total including the Pharmaceutical business division and the Consumer Products business division. Expansion of the Pharmaceutical division has been concentrated on Asia and the Middle East, with the establishment of new clinical R&D laboratories in China and Thailand, and new drugs launches in South Korea and Vietnam.

Key Partnering Alliances
Sosei: On 22nd February 2005, Sosei announced it had licensed OPC-51803 (Sosei code: SOU-003) from Otsuka. Sosei has been granted the rights to develop and commercialise the compound globally, except for Japan and other Asian countries where Otsuka retains the rights. Sosei also has co-promotion rights in Japan, whilst Otsuka retains a co-promotion option in the US and Europe.

Novartis Ophthalmics announced on 7th February 2005, that it had licensed-in rebamipide, an investigational treatment for dry eye, from Otsuka. Novartis will obtain an exclusive licence with the right to sublicense the compound globally, excluding Japan and selected Asian countries.

In November 2005, Taiho Pharmaceutical licensed-in the marketing rights to Abraxane for Japan for an up-front and milestone payment in excess of US$50 million.

Shionogi
Shionogi's consolidated net sales for the nine months ending December 2005, were ¥151,899 million, static compared to the previous year's nine-month period. Operating income was ¥24,590 million, up by 8% and net income was ¥20,949 million, an increase of 38%. R&D expenditure was ¥23,394 million, up by 1 %. Sales for pharmaceuticals and related businesses were ¥143,369 million (+2%), with ethical drugs to ¥129,200 million (+1%), OTC and quasi-drugs to ¥5,100 million (+1%) Diagnostics to ¥2,600 million (-3%).

Major Products Forecast to 2010
Flomox (Antibiotic)
Flumarin (Antibiotic)
Vancomycin (Antibiotic)
Kefral (Antibiotic)
Claritin (Respiratory)
Dobutrex (Cardiovascular)
Longes (Cardiovascular)
Immunance (Anticancer)
MS Contin (CNS)
OxyContin (CNS)

Key questions:
What are the future prospects for Flomox in the contracting Japanese antibiotic market?
To what degree will patent expiry in 2009 affect Claritin sales, and by how much?
What is Shionogi's development profile for respiratory drugs after irbesartan and pirfenidone have been launched?

Takeda
Takeda reported net sales of ¥935,213 million for the nine months ended 31st December 2005, a 7% increase over the previous year's corresponding period, supported by higher sales of in-house ethical drugs. The impact of foreign exchange fluctuations increased revenues by ¥8 billion. Operating income was up by 2% to ¥346,584 million, while net income rose by 14% to ¥281,142 million. Research and development expenditure increased by 36% to ¥116,056 million.

Major Products Forecast to 2010
Actos (Diabetes)
Basen (Diabetes)
Takepron (Gastrointestinal)
Blopress (Cardiovascular)
Lupron (Cardiovascular)
Isovorin (Gastrointestinal)
Benet (Musculoskeletal)
Seltouch (Musculoskeletal)

Key questions:
Facing generic pressure, will Takeda be able to achieve the estimated ¥400 billion sales for Actos?
What effect will generic competition have on sales of the newly off-patent Takepron?
What is the current situation in the long running litigation concerning Lupron in the USA?

Tanabe
Tanabe reported sales of ¥138,154 million for the nine months ended 31st December 2005, an increase of 1.3% from the same period in 2004. Operating income rose by 6.3% to ¥28,501 million, whilst net income rose by 2.2% to ¥16,391 million. R&D expenditure increased by 15.2% to ¥22,226 million.

Major Products Forecast to 2010
Maintate (Cardiovascular)
Sermion (Cardiovascular)
Tanatril (Cardiovascular)
Herbesser (Cardiovascular)
Lochol (Cardiovascular)
Remicade (Gastrointestinal)
Ceredist (CNS)
Gastrom (Gastrointestinal)

Key questions:
What will the estimated value of Remicade be in 2010?
What impact will the expected decline in sales of Tanatril, Sermion, Gastrom, Lochol and Proscope have on financial performance and by how much?
What is the new product launch schedule for products currently in Phase II/Phase III