Several Japanese drug majors such as Daiichi Sankyo are bracing themselves for generic challenge to their branded products, as the government tries to control spiralling drug costs.

At present, owing to changes in prescriptions and the spread of flat-sum reimbursement, generics account for around 17% by volume and about 7% by value of Japan’s prescription drug market.

The government, however, has signalled its intention to raise the volume figure to 30% over the next three years, a move which has motivated many major overseas generics players to start operations in Japan over the last few years.

According to the Ministry of Health, Labor and Welfare of Japan, nearly 318 generics from 54 firms were listed, including 119 versions of 13 active ingredients which became generic for the first time in the country. Sawai, one of Japan’s largest generics firms, has 34 generics listed, including several levofloxacin preparations and expects to increase total sales to around ¥2.8bn by the end of 2009.

The prices of all these first-time generics were again set at 30% less of the present price of the original drug.

Subsequently, the generic versions are putting intense pressure on sales of branded drugs. For instance, Daiichi‘s number three product antibacterial Cravit (levofloxacin) has been hit hard by the 31 generic versions that are made available in the market.

Other Daiichi Sankyo products like temocapril and irinotecan are also at the risk of first Japanese generic invasion. As a result, Daiichi Sankyo plummeted to a group net loss of ¥335.8bn.