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No. 361, October 1999

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Japanese Companies in the US


Only one U.S. marketer of nitrile-butadiene rubber will be left once ZEON CHEMICALS L.P. completes the purchase of this part of GOODYEAR TIRE & RUBBER CO.'s synthetic rubber business. The transaction, the terms of which were not disclosed, will give the NIPPON ZEON CO., LTD. subsidiary global sales rights to roughly 14,300 tons of product. With that addition, the Japanese company will have 40 percent of the world NBR market versus 33 percent now, further distancing itself from number-two BAYER AG, which controls about 24 percent of international sales. NBR is used to make such automotive parts as engine hoses and oil seals. Earlier this year, Louisville, Kentucky-based Zeon Chemicals acquired worldwide sales rights to the American-produced NBR output of another company (see Japan-U.S. Business Report No. 352, January 1999, p. 2). The leading U.S. producer of elastomers, it has manufacturing facilities in Louisville as well as in Hattiesburg, Mississippi and Bayport, Texas.

The world's fourth-largest supplier of fluoropoly-mers soon will become the second biggest. At a cost of $136 million, ASAHI GLASS CO., LTD. has agreed to acquire the international Fluon polytetrafluoroethylene business of IMPERIAL CHEMICAL INDUSTRIES PLC. This part of the British multinational's operations had revenues of $110 million in 1998. It employs close to 400 people. Production facilities are located in Bayonne, New Jersey and the United Kingdom, with a downstream specialty PTFE plant in Thorndale, Pennsylvania. Fluoropolymers are used in a variety of industrial applications, ranging from nonstick coatings for cookware to architectural coatings. Asahi Glass sees the deal as a way to bolster its position in a growth market in which it already has a strong presence. E.I. DUPONT DE NEMOURS & CO., INC. is the world's top producer of fluoropolymers.

Corporate restructuring cuts both ways. Case in point: KOBE STEEL, LTD.'s decision to sell before April 2000 GLASTIC CORP. to CRAWFORD GROUP LLC, a Detroit-based investment firm. Together with trader ITOCHU CORP. (15 percent), the steelmaker had purchased the manufacturer of reinforced thermoset materials and components and electrical and structural- grade fiberglass-reinforced plastics in 1988. Glastic, which has plants in Cleveland and Jefferson, Ohio and some 375 people on the payroll, had sales of $51.4 million in 1998. It was profitable through 1996 but lost money the following two years.

NIPPON SODA CO., LTD. has identified agrichemicals as one of its core businesses. To date, herbicides have accounted for most of its sales in this field, but the company hopes to add insecticides as an equal contributor. To that end, Nippon Soda established a laboratory to work on insecticide intermediates at a high technology research center in Alachua, Florida run by the state government and the University of Florida. By developing its own intermediates through the collaborative efforts of the American facility and its Japanese research center and manufacturing them at a new, $27.8 million plant in Toyama prefecture, the Tokyo firm believes that it can strengthen its international competitiveness in the insecticide market.

Although it recently started to market in the United States its own prescription drug for the treatment of adult-onset or Type II diabetes (see Japan-U.S. Business Report No. 359, August 1999, p. 2), TAKEDA CHEMICAL INDUSTRIES, LTD. acquired the rights to commercialize and sell outside Japan and three other major Asian markets a diabetes therapy discovered by DAINIPPON PHARMACEUTICAL CO., LTD. New York City-headquartered TAKEDA PHARMACEUTICALS AMERICA, INC. hopes to start U.S. clinical trials of AJ9677 through a contract research organization before yearend. Its target date for Food and Drug Administration marketing approval is late 2005. Takeda Chemical's own ACTOS (pioglitazone hydrochloride) is off to a fast sales start in this country.

OTSUKA PHARMACEUTICAL CO., LTD. has gained some powerful help in bringing to the market in the United States, the European Union and other key markets outside Japan and certain additional Asian countries its potential agent for schizophrenia. Here and in the EU, BRISTOL-MYERS SQUIBB CO. will comarket and copromote aripiprazole with Otsuka Pharmaceutical under the Japanese company's trademark, according to a recently signed development, commercial-ization and collaboration agreement. Aripiprazole, which Otsuka Pharmaceutical discovered in 1988, currently is in Phase III clinical testing in the United States. To date, the new compound with its unique mechanism of action has shown greater efficacy and fewer side effects than current antipsychotics. Otsuka Pharmaceutical and BMS plan a regulatory filing in this country for aripiprazole in late 2001.

In their second such arrangement in a year, SANKYO CO., LTD. signed a research agreement with QUARK BIOTECH, INC. This one covers autoimmune diseases. Under it, the Pleasanton, California company will use its gene-discovery technology to identify key genes and pathways responsible for the apoptosis of particular cells and tissues caused by such problems as chronic rheumatism, hepatitis and nephritis. QBI also will target candidates for drug discovery and, in time, conduct clinical testing of selected therapeutic candidates. For this work, it will receive research and development funding, milestone payments and royalties on the sale of any resulting products. In exchange, Sankyo will have exclusive rights to market worldwide drugs emerging from the research program. The initial collaboration between Japan's second-biggest pharmaceutical house and QBI involves the study of gene responses to Type II diabetes and the identification of possible treatments (see Japan-U.S. Business Report No. 354, March 1999, p. 2).

Yet another Japanese pharmaceutical company is teaming up with an American drug discovery firm in the hope of accelerating its search for a commercializable treatment for Type II diabetes. This pairing, intended to discover and develop small molecule drugs, brings together TANABE SEIYAKU CO., LTD. and OSI PHARMACEUTICALS, INC. It will build on the drug discovery alliance between the Uniondale, New York company and the Vanderbilt University Diabetes Center that has been underway since April 1998. Tanabe Seiyaku and OSI Pharmaceuticals will focus their research on normalization of the elevated plasma glucose levels seen in the large and rising number of people with noninsulin-dependent diabetes. The terms of the agreement call for the Japanese partner to make an up-front payment to OSI Pharmaceuticals, plus fund a four-year research program in exchange for exclusive worldwide marketing rights. Successful clinical development, which will be Tanabe Seiyaku's responsibility, could trigger milestone and other payments to the U.S. firm in excess of $30 million in addition to royalties.

To help advance its research on kidney disease, TAISHO PHARMACEUTICAL CO., LTD. chose a pioneer in the field of therapies to treat kidney fibrosis — a problem that can be caused by diabetes, hypertension and immune diseases as well as by chronic rejection of transplanted kidneys and that can result in end-stage renal disease and repeated chronic transplant rejection. Its collaborator is FIBROGEN, INC. Together, they expect to develop human monoclonal antibodies that neutralize the effects of connective tissue growth factor, a key cytokine in fibrosis. Taisho Pharmaceutical will provide funding for its South San Francisco, California partner's work in the form of equity purchases, milestone payments and money for half of the global costs of preclinical and clinical development outside of Asia. The Japanese firm will have exclusive commercialization rights in that area. FibroGen will retain those rights elsewhere.

KIRIN BREWERY CO., LTD.'s aggressive Pharmaceutical Division has contracted with CHEMRX, the wholly owned chemistry services subsidiary of San Diego, California's DISCOVERY PARTNERS INTERNATIONAL, to develop multiple classes of compounds for its lead optimization libraries. The targets of interest to the Japanese firm were not described. Under the pact, ChemRX will develop the chemistries on a fee-for-service basis. It will provide them exclusively to Kirin Brewery for screening in a wide range of that firm's internal assays. No additional money will change hands.

The Food and Drug Administration approved for marketing anti-allergy eye drops discovered and commercialized by SANTEN PHARMACEUTICAL CO., LTD. The Napa, California subsidiary of Japan's top supplier of prescription ophthalmic pharmaceuticals plans to launch ALAMAST (pemirolast potassium) 0.1% in the United States in the spring of 2000. This treatment for what technically is called allergic conjunctivitis will be the first Santen Pharmaceutical product sold here. ALAMAST will be manufactured by the company's Finnish unit and marketed to physicians by a 30-person sales force. The Japanese drug company hopes to introduce antibiotic eye drops in this country in 2001.

Relief could be on the way for people who suffer from atopic dermatitis, more commonly known as eczema. FUJISAWA PHARMACEUTICAL CO., LTD.'s Deerfield, Illinois subsidiary submitted a new drug application to the FDA for tacrolimus ointment, reportedly the first new drug designed specifically to treat the chronic skin conditions caused by eczema in more than 40 years. If cleared for sale, tacrolimus ointment will be manufactured at FUJISAWA HEALTHCARE, INC.'s Grand Island, New York plant. Production of the drug already has started in Japan, where it will be sold as an atopic dermatitis remedy under the Protopic brand name. .....FUJISAWA HEALTHCARE, INC. expects tacrolimus ointment to be as big a seller in the United States as its Prograf immunosuppressant, which is made from the same chemical substance. To help insure that outcome, the company will hire in the coming months an additional 40 to 50 sales people. It now has some 100 medical representatives on staff.

Like top-tier Japanese pharmaceutical houses frustrated by the Ministry of Health and Welfare's frequently slow drug-approval process, midsize ZERIA PHARMACEUTICAL CO., LTD. has come to see offshore clinical testing as a primary way to expedite the introduction of money-making new products. It plans to sign up an American contract research organization to conduct clinical trials on a drug that has shown effectiveness in treating patients with a dwindling white blood-cell count. Such a product would have obvious application for people fighting the human immunodeficiency virus.

An exchange rate of ¥108=$1.00 was used in this report.

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