Foreign operations generating greater portion of sales at Japan's Eisai; report

Headquartered in Japan, Eisai operates in two main business areas: Pharmaceuticals, including ethical drugs, over-the-counter medicines and diagnostics; and Others, which comprises pharmaceutical production systems and equipment.

Eisai has clinical research bases in North America, Europe, Asia and Japan, and employs over 10,600 people worldwide. The company sells prescription products within the therapeutic areas of: neurology; gastroenterology; metabolic; anti-inflammatory; diagnostics and oncology. It is now focusing its R&D efforts on neurology, gastroenterology and oncology/critical care.

Recent shifts in the Japanese economic environment have increased competition for domestic pharmaceuticals as the larger drugmakers from Europe and the USA are afforded more and more of the Japanese market share, according to a new analysis from Espicom Business Intelligence. Consequently, many of the smaller Japanese pharmaceuticals have struggled, leading them to pursue mergers, of which there were three notable examples in 2005 (Daiichi Sankyo, Astellas Pharma and Dainippon Sumitomo), and two more announced in 2007 (Mitsubishi Tanabe Pharma and Kyowa Hakko Kirin).

Eisai has been one of the exceptions, says Espicom, largely due to its long-established global operations. Foreign subsidiaries and operations generated 57.5% cent of Eisai's sales in fiscal 2009 (compared to 52.6% in fiscal 2006), and the company continues to strive to create efficient global management.

Globalization fuelled by Aricept and Pariet

Much of Eisai's globalization has been generated through the success of its two core products: Aricept (donepezil), for the treatment of Alzheimer's disease, and Aciphex/Pariet (rabeprazole) for gastric acid-related conditions. In order to maximize the value of these products abroad, Eisai recognized the need for strategic alliances with companies with greater experience in foreign markets. Therefore, the Japanese firm has been marketing Aricept in various markets with the pharmaceutical giant Pfizer since November 1994, and Aciphex/Pariet has benefited from co-marketing with Janssen Pharmaceutica (a major subsidiary of Johnson & Johnson) in both European and US markets since January 1997.

Such is Eisai's confidence in the recognition and standing of these products, and in its own US operations, the company assumed total control over the marketing of Aricept in the USA in September 2005, and of Aciphex/Pariet, earlier in January 2004. Eisai is now targeting the emerging markets of China and India and, in October 2004, established the first Japanese pharmaceutical subsidiary in India, followed in March 2007, by the establishment of an active pharmaceutical ingredient R&D and manufacturing subsidiary, Eisai Pharmatechnology Manufacturing Pvt in Vishakhapatnam, which will commence operations in fiscal 2010. Eisai will be committing resources to these markets on a priority basis, thus laying the foundations for future business, notes the Espicom report.

Both of the aforementioned products will be the key growth drivers for Eisai in the short-term, however, pending patent expirations (November 25, 2010, for Aricept, and May 2013 for Aciphex/Pariet) are a serious concern for the company, which will need to be addressed. Eisai has responded by targeting a new therapeutic of interest, oncology and critical care. The company believes this field has significant levels of unmet needs and therefore, the potential to generate growth in the long-term. Eisai's confidence and dedication to this strategy has been demonstrated by its recent acquisitions of Morphotek and MGI Pharma, two biopharmaceutical companies with extensive history in the field of oncology. Eisai has also purchased rights to five oncology products from Ligand Pharmaceuticals, the report recalls.