June 30, 2014 1:00 pm JST

Generic-drug maker Sawai to double capacity by fiscal 2020

TOKYO -- Sawai Pharmaceutical will double annual production capacity to 16 billion pills by fiscal 2020, aiming to make the most of government efforts to nudge Japanese doctors toward money-saving generic drugs.

     The company is gearing up for the expiration of patents on brand-name treatments. Takeda Pharmaceutical's Blopress hypertension treatment will lose protection this year, while patents on such other products as a Shionogi cholesterol reducer will expire after that.

     Sawai is expected to spend 4 billion yen ($39 million) or so to add equipment at its mainstay plant in Chiba Prefecture to raise the current total domestic capacity of 8 billion pills across four sites in Japan to 10 billion by the end of fiscal 2014. It will then raise the figure to 16 billion, possibly by setting up new plants.

     Towa Pharmaceutical, the No. 4 generics maker in Japan, will invest 8 billion yen to increase capacity by 30% to 7.5 billion pills by the end of fiscal 2014. No. 2 player Nichi-Iko Pharmaceutical has bought facilities from Astellas Pharma to lift capacity from 6 billion pills to 10 billion.

     As part of efforts to curb health care costs, the government updated the health care fee schedule in April so that reimbursements to providers are more generous when switching to generics.

     In Japan, many doctors have continued to stick with brand-name drugs even after their patents expire. They switch to generic versions only about 48% of the time when they become available, compared with 91% in the U.S. and 82% in Germany. But now, more hospitals will likely use generics.

     Drugmakers dependent on brand-name treatments that have lost patent protection will take a major hit to their earnings, potentially leading to industry reorganization.