Japan's Sankyo and Daiichi Confirm Merger to Proceed

Following reports last week that Japanese drugmakers Sankyo and Daiichi Pharmaceutical were in merger talks, the two companies have confirmed that they will combine operations in October. Sankyo's offer values its smaller rival at some JPY813bn (US$7.72bn). From October, Sankyo and Daiichi will operate under a single holding company, to be known as Daiichi Sankyo Co. A full merger of brands and operating units should complete by April 2007.

The merger will allow Sankyo to regain its second place in Japan's drug market, which it had been expected to lose after the imminent merger of Yamanouchi and Fujisawa. The merger will also fend off the threat of a bid from any of a number of foreign firms, which are currently stepping up efforts to win market share in Japan. Further, Sankyo hopes that its strong development pipeline will guarantee future growth, as conditions in its domestic market remain tight.