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Japan's Daiichi Reports Solid April-December Results

February 9, 2005

Japanese drug producer Daiichi has reported solid sales in the first three quarters of its fiscal year, despite difficult conditions in the domestic market. Sales of prescription drugs in the period grew only 0.4% to JPY165bn (US$1.56bn), while OTC sales rose 16.4% to JPY8.1bn (US$76.76mn) and fine chemicals revenue declined. Total turnover was thus 0.2% lower year-on-year at JPY253.8bn (US$2.41bn), while net income declined 0.7% to JPY25.3bn (US$239.75mn).

The results mainly reflect the impact of a reimbursement price cut implemented in April 2004, and indicate that the company's key products continued to perform strongly despite challenging conditions. Revenue in Japan on Daiichi's leading product, the antibacterial treatment Cravit (levofloxacin), fell 4% to JPY36.2bn (US$343.31mn), but bulk exports of the drug rose 26.3% to JPY19.7bn (US$186.86mn). This mainly reflected increased orders from US distributor Johnson & Johnson, which markets the drug in the US as Levaquin. Notably, sales of Daiichi's anti-inflammatory Mobic (meloxicam) almost doubled to JPY6.9bn (US$65.45mn) following the termination of a joint marketing deal with German drugmaker Boehringer Ingelheim in mid-2004.

Meanwhile, Daiichi has outlined details of its R&D pipeline. The company has begun Phase I trials in China on a new treatment for the urinary tract condition dysuria, originally developed by fellow Japanese drugmaker Kissei. A new chemotherapeutic agent is also undergoing Phase I trials in Japan. However, Japanese authorities have requested further information on memantine, a prospective treatment for severe Alzheimer's disease.

The results are seen as generally positive despite falling short of earlier targets, and may lead the company to exceed forecasts for the full fiscal year to end March. While Daiichi expects sales to remain flat at some JPY323bn (US$3.01bn), the company is already not far short of a projected 5% increase in operating income for the year to JPY48.50bn (US$460.02mn) after only nine months.