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Japan's Drug Firms Double Spending on Aging Research

November 10, 1987|From Reuters

TOKYO — Japan's aging population is providing Japanese drug makers a golden opportunity to develop and market new drugs, giving them an edge over more aggressive foreign rivals.

Drug firms, preparing for the year 2000 when one in four Japanese will be over 65, have doubled their research spending over the past five years, hoping to find drugs to fight senility, heart attacks and cancer.

"Drug makers everywhere are striving to find ways to prevent diseases of the elderly," said a spokesman for Takeda Chemical, Japan's biggest pharmaceutical firm.

"But since Japan's population is aging at a more rapid pace, we're determined not to be beaten by our competitors," he said.

The ultimate goal is to halt the physical deterioration that aging naturally brings. Meanwhile, the drug companies are well aware of the fact that people over 65 spend five times as much on health care as those under 65.

One in eight Japanese is already over 65, and average life expectancy, which this year will hit 75.23 years for men and 80.93 for women, is rising.

Western drug firms currently spend more on research both in percentage and absolute terms. But the Japanese companies are boosting spending more quickly.

"Basic research is our top priority," Takeda President Yoshimasu Umemoto said. Basic research should lead to new drugs, higher profits for Japanese companies and deeper penetration of overseas markets, he said.

However, Takeda's strategy of emphasising basic rather than applied research, the next step, is fraught with risk. Bringing a new drug to market from basic research through clinical testing and governmental approval can take 10 years and cost as much as 10 billion yen ($70 million), he said.

"You conduct research for years, never knowing whether or not you will find anything," Umemoto said.

Last year, Takeda spent 34.9 billion yen ($250 million) on research and plans to boost such spending by 10% a year, a spokesman said.

Takeda, which also makes chemicals and food products, racked up record sales of 492.6 billion yen ($3.57 billion) in the year ended March 31, up 3.3% over the previous year's levels.

In addition to Takeda, analysts said drug makers Tanabe Seiyaku, Fujisawa Pharmaceutical and Yamanouchi Pharmaceutical are best positioned to succeed.

Analysts praise the companies' growing emphasis on research, but are critical of what they view as a passive approach to overseas expansion.

"Financially, it would be simple to take over a U.S. firm, but we are not inclined to do so. Takeovers don't fit with our values, and we are not considering one now," Umemoto said.

Instead, Takeda plans to wait at least 10 years until it has developed a stable of unique drugs before seeking to break into the top ranks of the global industry.

Takeda currently exports to the United States and other countries, but overseas sales represent only about 6% of revenues, Umemoto said.

Analysts note, however, that licensing drugs to foreign distributors, the most common way to sell overseas, is not the most profitable method. Foreign partners typically take a hefty share of profits and work to develop a similar drug, destroying any incentive to push the competitor's brand, they said.

TAP Pharmaceuticals, Takeda's joint-venture in the United States with Abbott Laboratories, has succeeded in winning approval for only one drug--Lupron, a drug against prostate cancer--since it was formed in 1985.

Although a full-powered assault on foreign markets may have to wait until the 21st Century, the graying Japanese population should keep Takeda's profits running strong.

Drugs against ulcers and allergies have been approved recently, and medicines for cancer, hypertension and weak bones are expected to be granted approval in the near future, Umemoto said.

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