Reports: Japanese Drugmakers Sankyo and Daiichi to Merge

According to reports in the Japanese press, drug producers Sankyo and Daiichi are to merge operations in October. The two firms are to create a holding company with annual sales revenue of more than JPY900bn (US$8.53bn). The combined company will hold the second place in the Japanese sector, behind only Takeda, and leapfrogging Astellas, a merged entity of Yamanouchi Pharmaceutical and Fujisawa due to begin operations in April.

The companies are likely to benefit from a resulting increase in sales forces in the US, and could also gain due to little overlap in therapeutic activity. Sankyo, which has an attractive pipeline, produces drugs for circulatory diseases including cholesterol treatment Mevalotin, Japan's top-selling drug in 2003. Daiichi's products include synthetic antibiotic Cravit, which had sales of some US$168mn in Japan in 2003.

The recent series of mergers in the Japanese pharmaceuticals sector owes much to difficult market conditions. The government has launched aggressive cost-cutting measures, and there is rising competition from foreign drug majors, with many US firms considerably larger than the local sector's leading companies. Spending is set to reach US$82bn at consumer prices by 2007.