Drug Makers Post Higher Interim Profits

The companies were able to shake off the price reduction through higher sales and cuts in operating costs. The price cuts are designed to get Japans notoriously high drug prices closer to international levels.

Takeda Chemical Industries, Japans largest drug maker in terms of sales, posted sales of Y311.3 billion ($2.77 billion) in the first half of the 1996-97 business year, up 5.2 per cent from a year ago. Parent current profit was up 12.4 per cent to Y49.9 billion ($445 million).

Current profit is pretax and includes gains or losses on non-operating activities, such as investment in stocks.

Our better-than-expected interim results were due mainly to an increase in exports and strong domestic sales of recently introduced products, said a company spokeswoman.

 

She also pointed out that the firm was able to raise its profitability at the operating level to 15.2 per cent, up 1.6 per centage points from a year ago, by cutting costs.

Meanwhile, Sankyo Co Ltd, the second largest, saw its sales rise by 6.7 per cent to Y220.5 billion ($1.96 billion) and parent current profit soar by 21.6 per cent to Y53.7 billion ($479 million).

The robust sales of our drugs which were developed in-house have helped to raise profitability, said a company official.

Number three ranked Yamanouchi Pharmaceutical Co Ltd saw sales rise 6.6 per cent to Y154.8 billion ($1.38 billion) and parent current profit advance three per cent to Y31.9 billion ($284 million).

The companys mid-term revenues were buoyed by a sharp increase in exports of its mainstay product Gastar, which is used to treat ulcers, a spokesman said.

However, he also pointed out that the last drug price cut by the government was a considerable blow as it surpassed their cost reduction efforts.

In April, the government reduced prices for drugs specified in the National Health Insurance system by an average of 8.5 per cent.

Looking forward, the drug manufacturers of Japan is likely to face downward pressure on their profits from another drug price cut which is expected next April.