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Daiichi Sankyo: Pipeline, Products, Performance and Potential
Espicom Business Intelligence Ltd, Oct 2009, Pages: 98
Pharmaceutical company intelligence reports from Espicom provide a full review of the company's activities together with five-year sales forecasts for its key products. The company's financial performance is covered in-depth, from its latest results to a complete analysis of its latest full fiscal year and an outlook for the future. A section on company strategy covers mergers, acquisitions and divestitures, key agreements, products and R&D. An overview of key products and R&D is followed by a comprehensive review of the company's product portfolio and research and development pipeline by therapeutic area. In addition, supplementary appendices provide more in-depth information on financials, agreements and corporate events.
Executive Summary
To primarily overcome the challenges presented by global competition, Daiichi Pharmaceutical and Sankyo signed an agreement to integrate their businesses on 13th May 2005. The joint holding company of Daiichi Sankyo was created on 28th September 2005, followed by the integration of pipelines from both companies and the start of a sales collaboration, in October 2005.
Market conditions in Japan are becoming increasingly fierce. Japan’s medical insurance system is being reformed, with measures being taken to curb medical expenses, including the promotion of generic drug use and the April 2004 national health insurance drug price revisions. These developments, against a backdrop of rapid demographic change, with a falling birth rate and increasing numbers of aged citizens, and the possibility of drug price reform, could significantly affect Daiichi Sankyo’s business.
In fiscal 2008, for the first time since the company’s inception, Daiichi Sankyo experienced a decline in sales. In fiscal 2009, despite gains from the pharmaceutical segment, total company revenue fell once again. Re-organisation of the combined company following the merger of Daiichi and Sankyo had managed to achieve significant cost reductions, however, the acquisition of Ranbaxy led to a net loss in fiscal 2009, coupled with a double-digit decline in operating income.
With a very dated product portfolio, it is perhaps unsurprising that Daiichi Sankyo has announced plans to enter the generic pharmaceuticals business via the acquisition of Ranbaxy Laboratories. This purchase, valued between US$3.4 million and US$4.6 million, is a major move for Daiichi Sankyo and is expected to have two key benefits: firstly, as mentioned, it will expand the company’s pharmaceutical profile, with the company now offering both branded and generic products. Secondly, the move will considerably expand Daiichi Sankyo’s global presence. Ranbaxy is based in India, one of the world’s fastest growing pharmaceutical markets, however, it also has sales forces around the globe. During fiscal 2008 and 2009, Daiichi Sankyo’s presence outside of Japan continued to rise, with nearly a third of its sales now generated overseas. The purchase of Ranbaxy should further expand the company’s global profile and should help it escape the confines of a difficult domestic market.
A number of other Japanese companies have chosen to merge in recent years, including Fujisawa and Yamanouchi (to form Astellas Pharma), Dainippon and Sumitomo (Dainippon Sumitomo Pharma), Mitsubishi Pharma and Tanabe (Mitsubishi Tanabe Pharma) and most recently Kyowa Hakko and Kirin Brewery (Kyowa Hakko Kirin). Consequently, Daiichi Sankyo has experienced some short-term benefits by being one of the first major Japanese pharmaceutical mergers, however, this advantage was short-lived. The purchase of Ranbaxy may once again push Daiichi Sankyo ahead of its local competitors. Costs incurred from the take-over have obviously impacted profitability initially, therefore, the company will hope sales rise rapidly and integration is achieved swiftly and efficiently.
With a strong pipeline containing a number of promising in-licensed compounds (prasugrel, edoxaban and denosumab in particular) and the acquisition of Ranbaxy, Daiichi Sankyo seems well placed to maintain its position as one of Japan’s leading pharmaceutical companies.
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