Japan-US Business Report Logo

No. 353, February 1999

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Japanese Companies in the US


Two of the biggest players in the American market for industrial gases, both owned by Japan's top company in this field, NIPPON SANSO CORP., have been merged in a cost-cutting move. The merger combined TRI- GAS INC. of Irving, Texas with Parsippany, New Jersey-headquartered MATHESON GAS PRODUCTS, INC. The latter is a major producer of specialty electronic gases, especially for the semiconductor industry, as well as of gas-handling equipment and purification systems. Its key products, provided from facilities across the country, are ULTRA-LINE high-purity gases, the SDS Safe Delivery Source and Semi-Gas Systems brands of gas-handling equipment and Nanochem purification systems. Nippon Sanso acquired Matheson in 1983 and later bought other suppliers that were folded into Matheson. Tri-Gas, purchased in the spring of 1995, is a leading manufacturer of industrial gases, with 56 distribution centers in the southern United States. The new company will have annual revenues of approximately $400 million.

The five American companies wholly owned by MITSUBISHI RAYON CO., LTD. have been placed under the umbrella of a new holding company in order to reduce corporate taxes and to promote administrative efficiency. MRC HOLDINGS (AMERICA), INC. includes Mitsubishi Rayon's Manhattan-based sales subsidiary, MITSUBISHI RAYON AMERICA INC., plus four manufacturing operations. The largest is NEWPORT ADHESIVES AND COMPOSITES, INC., an Irvine, California maker of adhesives and composites with yearly sales of $34 million and 92 employees. Close behind is GRAFIL, INC. of Sacramento, California, a 96-person maker of carbon fibers. Its annual sales run around $33 million. Folded into the holding company as well were DIANAL AMERICA, INC. of Pasadena, Texas and MIRWEC FILM, INC. of Bloomington, Indiana. Dianal produces coating resins with a work force of 48 people. It has sales of $24 million a year. The 19 people employed by Grafil make $3 million worth of polypropylene film a year.

Under a 10-year agreement, SEKISUI PLASTICS CO., LTD., Japan's largest manufacturer of foamed plastics, licensed a patented process for making PET (polyethylene terephthalate) foam to EASTMAN CHEMICAL CO. The big Kingsport, Tennessee-headquartered plastics manufacturer initially is using the know-how in its Eastalite foam technology for food packaging. This product results in food containers that can withstand temperatures from minus 40 degrees Fahrenheit to 400 degrees Fahrenheit, allowing containers to go from the freezer to a microwave or a conventional oven and then to the table. To the extent that Eastalite foam technology incorporates Sekisui Plastics' patents and licenses, Eastman Chemical has the right to market the product worldwide outside of Japan, South Korea and Taiwan.

Nine months after it took over GREEN CROSS CORP., once the major supplier of blood products in Japan, YOSHITOMI PHARMACEUTICAL INDUSTRIES, LTD. indirectly boosted the capital of Green Cross' production unit. Los Angeles-headquartered ALPHA THERAPEUTIC CORP. will use the $25 million to increase its capacity to make plasma products, especially IGIV (immune globulin intravenous), and, at the same time, to ensure that its output meets increasingly strict Good Manufacturing Practice requirements. Alpha began a five-year project in 1998 to expand and enhance its manufacturing facilities. The first of the added capacity is expected to come onstream in 2000. By 2004, Alpha will have nearly twice the capacity as now to make IGIV.

A semi-automated nucleic acid probe test developed by GEN- PROBE INC. for early detection of the hepatitis C virus and the human immunodeficiency virus in pooled samples of plasma from blood donations (see Japan-U.S. Business Report No. 347, August 1998, p. 2) will be investigated by the American Red Cross. The testing will be conducted at the Red Cross' new, state-of-the-art National Genome Testing Laboratory in San Diego, California. Gen-Probe, a wholly owned CHUGAI PHARMACEUTICAL CO., LTD. company that also is located in San Diego, and its development partner, Emeryville, California-based CHIRON CORP., will provide NAT (nucleic acid testing) kits and instruments to the Red Cross. Tests like Gen-Probe's that use viral nucleic acid could provide faster and more sensitive identification of blood contaminated by HCV and HIV than current tests, which detect antibodies or viral proteins, thereby adding another layer of safety screening to the U.S. blood supply.

Venture capitalist JAFCO CO., LTD. joined the original investor in PENTOSE PHARMACEUTICALS, INC. in providing $7 million in financing for the Cambridge, Massachusetts firm. Pentose will use part of the money to support the development of its INACTINE compounds, which are designed to inactivate pathogens in blood-derived therapeutic products. Clinical trials of these compounds will start in the first half of 1999. Other funds will be applied to the continued clinical development of PEN203, the firm's lead PAPIRINE topical compound for the treatment of cutaneous and genital lesions caused by the human papillomavirus.

SANKYO CO., LTD., the number-two Japanese pharmaceutical company, opened a research and development facility in San Diego, California as part of its drive to internationalize its drug discovery and development effort. Part of SANKYO PHARMA, INC., the company's Parsippany, New Jersey subsidiary, the mandate of the laboratory is to develop products that Sankyo can market around the world. Researchers will focus primarily on treatments for diabetes, Alzheimer's disease and immune-related disorders.

By 2002, FUJISAWA PHARMACEUTICAL CO., LTD. hopes, offshore sales will generate 50 percent of its revenues versus 32 percent in FY 1997. To support achievement of this objective, the drugmaker has penciled in an expansion over the coming year of the number of medical representatives or sales personnel on staff at FUJISAWA HEALTHCARE, INC. in Deerfield, Illinois to 150 from 100. The increase also is tied to the marketing in 2000 of what the company envisions will be its next big-selling drug in the United States — Protopic, a treatment for dermatitis. Much of Fujisawa Healthcare's business now is generated by the immunosuppressant Prograf.

In their second gene discovery alliance, GENE LOGIC INC. will use its READS gene expression and bioinformatics technologies to identify new drug targets for JAPAN TOBACCO INC. in an undisclosed therapeutic area. Over the project's nearly four-year estimated lifetime, JT will pay the Gaithersburg, Maryland company at least $12 million, plus make milestone and royalty payments associated with the development and marketing of any drugs resulting from the use of its technologies. Since September 1997, Gene Logic has been using its READS technology to build a data base for JT of genes "differentially expressed" between normal kidney tissue and tissue from patients with glomerulonephritis, a type of kidney disease. A number of genes that represent potential drug targets for glomerulonephritis have been identified. Gene Logic and Japan Tobacco now are selecting and developing assays for these genes preparatory for them entering JT's new drug screening program.

A third Japanese company has signed on with COMBICHEM, INC. to accelerate its drug discovery program. ONO PHARMACEUTICAL CO., LTD. has given the San Diego, California computational drug discovery company the job of generating lead drug candidates for a target reported to be autoimmune diseases using its Discovery Engine process. The target was selected from a group of possibilities screened by CombiChem's Universal Informer Library. The terms of the two-year agreement call for Ono to provide an initiation fee, research support and milestone payments to CombiChem. The midsized Japanese pharmaceutical company has exclusive global rights to develop and market products resulting from the collaboration. CombiChem also has worked with SUMITOMO PHARMACEUTICALS CO., LTD. and TEIJIN LTD.

In the second such deal in less than a year, SS PHARMACEUTICAL CO., LTD. has awarded ARENA PHARMACEUTICALS, INC. the right to develop, make and market one of its ethical compounds in the United States and Europe. The product is AHL157, a cholesterol treatment. The San Diego, California biotechnology company expects to begin Phase I clinical trials in this country in late spring or early summer. The first tie-up between SS Pharmaceutical, best known as a supplier of over-the-counter drugs, and Arena Pharmaceuticals involves T-82, an aceticholinesterase inhibitor for the treatment of Alzheimer's disease (see Japan-U.S. Business Report No. 342, March 1998, p. 2).

Backstopped by an American contract research organization, ASAHI CHEMICAL INDUSTRY CO., LTD. has launched its first drug development program in the United States. In January, the pharmaceutical division of New York City-based ASAHI CHEMICAL INDUSTRY AMERICA, INC. opened a facility in Princeton, New Jersey staffed by three clinical researchers to work on drugs for cardiovascular problems. That is one of the four pharmaceutical areas in which Asahi Chemical is specializing. The others are bone, immunological and central nervous system diseases.

The only orally available approved drug in the world that addresses the cause of pulmonary vascular disease has been licensed by developer TORAY INDUSTRIES, INC. to UNITED THERAPEUTICS CORP. for North America. Beraprost is part of a class of drugs called prostacyclin. This molecule is key to the maintenance of healthy blood vessels. People with pulmonary vascular disease — a heart-lung disorder caused by collapsed blood vessels within the lungs and consequent high blood pressure between the heart and the lungs — do not produce enough prostacyclin. The only currently available therapy is a 24-hour-a-day intravenous drip. Silver Spring, Maryland-headquartered United Therapeutics expects to complete within this year Phase II clinical trials of Beraprost, which usually is taken three to four times daily. Phase III testing could be finished by 2001. As part of their collaboration, Toray Industries spent $3 million to acquire 5 percent of United Therapeutics' stock.

The Food and Drug Administration cleared for sale PLETAL (cilostazol), a drug commercialized by OTSUKA PHARMACEUTICAL CO., LTD.'s Rockville, Maryland subsidiary for relief from the leg pain caused by hardening of the arteries. PLETAL is the first new compound approved in more than 15 years for what is known as intermittent claudication, which can be so severe that patients have trouble walking. OTSUKA AMERICA PHARMACEUTICAL, INC. will have PLETAL available early this year.

CIBA VISION CORP. has taken over U.S. marketing of OTSUKA PHARMACEUTICAL CO., LTD.'s Ocupress (carteolol hydrochloride) Ophthalmic Solution, 1%, from the Japanese company's Rockville, Maryland subsidiary. Ocupress is a nonselective beta-adrenoceptor blocking agent used in the treatment of glaucoma. Duluth, Georgia-headquartered CIBA Vision, the eye- care unit of Switzerland's NOVARTIS AG, already has European distribution rights to Ocupress.

Under a 10-year exclusive agreement, SEIKAGAKU CORP. gave SMITH & NEPHEW, INC. the right to market an ultrapure hyaluronic acid product that is injected into a patient's knee joint to help alleviate the pain associated with osteoarthritis. The agreement for what will be named SUPARTZ covers the United States, Canada, Australia, South Africa, the United Kingdom and parts of Europe. FDA approval of SUPARTZ is pending. The Orthopedic Division of London's Smith & Nephew is located in Memphis, Tennessee. It designs and manufactures replacement knee, hip and shoulder implants. Tokyo-headquartered Seikagaku is forecasting sales under the marketing pact at $8.8 million in 2000.

By giving FISHER SCIENTIFIC L.L.P. exclusive rights to market in the United States its reagents used in genetic research, TAKARA SHUZO CO., LTD. hopes to quickly boost U.S. reagent sales to $4.4 million a year from $1.3 million in FY 1997. The agreement with Pittsburgh-based Fisher Scientific will give the Kyoto company access to a much broader group of customers, including universities, research institutes and businesses. Takara Shuzo has an extensive line of molecular biology and polymerase chain reaction products.

An exchange rate of ¥113=$1.00 was used in this report. aaaaaa

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