TOKYO -- Chugai Pharmaceutical is considering unloading the production and sales rights of some 15 medications with expired patents to Taiyo Holdings for roughly 20 billion yen ($176 million), expecting generic drugs to become cheaper as Japan moves to rein in medical spending.
The medications, which include cancer treatments as well as bone and joint remedies, bring in sales of around 10 billion yen annually. Related staff are not expected to be part of the deal.
Taiyo, a chemical maker, could complete the transfer as soon as 2018, including drug production outsourcing arrangements currently handled by Chugai.
Chugai positions new-drug development as its main business. The company has been strong at developing biomedicines such as rheumatoid arthritis drug Actemra. Though Chugai operates as a subsidiary of Switzerland's Roche Holding, the world's third-largest drugmaker, the Japanese unit has found success developing several products independently.
Taiyo's smartphone components business has been brisk, capturing over 50% of the global market for chemicals used to insulate printed wiring board. The company aims to broaden its scope and enter the drug business by acquiring Chugai's operations for patent-expired medicines.
Other major Japanese drugmakers are selling their generics operations to pour resources into developing new medicines. Takeda Pharmaceutical last year transferred operations for patent-expired drugs to Teva Takeda Yakuhin. Shionogi & Co. also sold off such businesses to two generics specialists, while Astellas Pharma and Mitsubishi Tanabe Pharma unloaded portions of their generics operations as well.
In fiscal 2014, Japan introduced a system designed to reduce prices of patent-expired drugs and promote cheaper generic medications in order to control medical costs. Off-patent medications accounted for 2.7 trillion yen -- or 26% -- of Japan's total drug costs in fiscal 2016, but that figure is expected to fall by 1 trillion yen to 16% in fiscal 2026, according to the European Federation of Pharmaceutical Industries and Associations.