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No. 366, March 2000

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Japanese Companies in the US


More than in any other industry, the rapid spread of business-to-business electronic commerce, particularly the advent of industrywide Internet exchanges, affects the core operations of Japan's giant trading companies. However, they have been fairly quick to recognize the cost advantages, efficiency benefits and market-reach opportunities that the B2B model delivers. For instance, four of the five biggest traders — MARUBENI CORP., MITSUBISHI CORP., MITSUI & CO., LTD. and SUMITOMO CORP. — have invested in CHEMCONNECT INC. The San Francisco company runs the World Chemical Exchange, the largest on-line marketplace for chemicals and plastics of all kinds. Operational since July 1999, the ChemConnect exchange is an open, neutral marketplace where members can find trading partners, negotiate pricing and complete transactions on-line around the clock. They also have real-time access to supply and demand information and other industry news. The four trading companies, which all have significant chemicals and plastics businesses, join more than 5,000 World Chemical Exchange members, including such manufacturers as BASF AG, BP AMOCO CHEMICALS P.L.C., DOW CHEMICAL CO., EASTMAN CHEMICAL CO., GENERAL ELECTRIC CO.'s GE Plastics and PPG INDUSTRIES, INC.

The Pasadena, Texas unit of NISSAN CHEMICAL INDUSTRIES, LTD. — which has made organosilicasol, an organic solvent used as an additive in hardeners and anticorrosion agents as well as in polyester resins, since the latter part of 1997 — is expanding into a polishing agent for silicon wafers known as Snowtex. The company has designated roughly $9.2 million for a second plant that should be completed in 2001. Production of Snowtex, a colloidal silica sol consisting of microfine particles of silicon dioxide dispersed in water that can be used in a variety of applications, should add $27.5 million to NISSAN CHEMICAL HOUSTON CORP.'s annual revenues. It also could lead to the tripling of the company's work force to 30 people. Nissan Chemical decided to add Snowtex to its affiliate's product line because of expanding demand for the polishing agent from chipmakers operating in the United States.

A compound discovered by ASAHI CHEMICAL INDUSTRY CO., LTD. that shows promise in the treatment of obesity and diabetes will be exclusively developed, commercialized and sold outside East Asia by SMITHKLINE BEECHAM PLC. AZ40140 is a Beta-3 receptor agonist that breaks down fat in the body and promotes insulin production. Philadelphia's SB expects to begin clinical testing of AZ40140 in the United States later this year, focusing on the benefits of the drug for obesity. It will make milestone payments to Asahi Chemical during development and pay royalties on sales. In Japan and in neighboring countries, the Japanese company and its partner will jointly commercialize AZ40140. As part of the agreement, Asahi Chemical will codistribute in Japan SB's Avandia (rosiglitazone maleate), a treatment for Type II, or adult- onset, diabetes. That product is in Phase II clinical testing there.

SANKYO CO., LTD. will fund for another year, or until May 2001, work with METABASIS THERAPEUTICS, INC. on a new therapy for the treatment of Type II diabetes. Their collaboration, initiated in 1997, is based on the San Diego, California biopharmaceutical company's discovery of a series of potent and selective inhibitors of the gluconeogenesis pathway, which is responsible for the abnormal overproduction of glucose in the liver of patients with Type II diabetes. The partners believe that gluconeogenesis inhibitors will be effective in people who are both early- and late-stage diabetics, whether used alone or in combination with other diabetes drugs. The latter includes the class of drugs known as insulin sensitizers, such as Sankyo's Rezulin (troglitazone). Metabasis hopes to begin clinical evaluation later this year of the first diabetes drug developed under its pact with Japan's number-two drug firm.

In follow-on work, PROTEIN DESIGN LABS, INC. will humanize for FUJISAWA PHARMACEUTICAL CO., LTD. an antibody for the treatment of inflammatory and immunologically mediated conditions. Under the original July 1999 arrangement, the Fremont, California specialist in the development of humanized antibodies modified certain Fujisawa Pharmaceutical antibodies. The Japanese company will make an up- front payment of $1.5 million to Protein Design Labs as well as fund its research program.

The national rollout by WARNER-LAMBERT CO. of Benadryl Allergy/Cold FASTMELT tablets represents the launch in North America of YAMANOUCHI PHARMA TECHNOLOGIES, INC.'s WOWTAB quick- dissolving, without-water dosage form. The Palo Alto, California firm is in charge of the worldwide commercialization and introduction of specialized drug-deliv-ery technologies for parent YAMANOUCHI PHARMACEUTICAL CO., LTD. (see Japan-U.S. Business Report No. 364, January 2000, p. 2). To date, nine prescription WOWTAB products have been released in Japan.

An exchange rate of ¥109=$1.00 was used in this report.aaaaaa

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