Valued at USD 75 billion, Japan is the second largest pharmaceutical market in the world. Almost 100% of Japanese citizens are covered through National Health Insurance, funded by the Japanese Government. To reduce the healthcare expenditure burden, the Government has introduced a series of reforms that would expand Generic penetration to 30% of the overall Japanese pharmaceutical market by 2012 with an estimated market size of USD 6.5 billion. The Government is also offering financial incentives to hospitals, pharmacies, patients and other stakeholders to encourage the use and adoption of Generics. This has created unique opportunities for growth of Generic players and makes Japan one of the most attractive Generic markets in the world.

Kyowa, Lupin's 100 % subsidiary in Japan is focused on tapping into this emerging opportunity and has identified Neurology, Cardiovascular, Gastroenterology and Respiratory segments as core therapeutic areas of focus for drug development and marketing. Kyowa is amongst the fastest growing generic pharmaceutical companies in Japan. Today, it markets over 200 products through its 75 strong sales and marketing team. Kyowa is one of the largest generic players in the Neurology segment with 95 products and covers 94% of psychiatry hospitals in Japan.

For FY 2010, Kyowa reported consolidated sales of JP¥ 10.4 billion (INR 5,341 million) contributing to 11% of Lupin's consolidated revenues, a growth of 9% over the previous fiscal. Kyowa's conscious drive for cost optimisation through API prices has resulted in improvement in gross margins by 4%.

In FY 2010, Kyowa launched 6 new products and filed applications for an additional 8 products. With a view to augment product filings and optimise R&D costs, Lupin has also started developing products in India for Kyowa. The Company is also exploring In-licensing arrangements and strategic alliances with various Japanese, European and Indian companies to introduce new products into the Japanese market.

APIs have been identified as a key area for synergy between Lupin and Kyowa and the Company has started developing and filing the APIs required by Kyowa. The Company filed and recieved approvals for 2 Drug Master Files for the Japanese market during FY 2010. The supply of these APIs to Kyowa would commence shortly and would help Kyowa achieve significant savings and better margins. The Company is already working on augmenting the pipeline of APIs from India and many more DMFs will be filed in the next few years.

To support its growth plan and increased demand, Kyowa plans to enhance its manufacturing capacity, improve machine productivity and reduce utility costs for its manufacturing facility in Japan.

Research & Manufacturing
Kyowa has state of the art research and manufacturing facilities and spends 8% of sales on R&D. With Lupin’s support on various areas of R&D, regulatory, manufacturing and sourcing, coupled with Kyowa’s experienced management team and infrastructure in Japan, the company is poised for accelerated growth in the years to come.

For more information log on to www.kyowayakuhin.co.jp