Daiichi Sankyo Company has announced an agreement with Ranbaxy Laboratories to establish a new entity to market the company’s generic drugs domestically in Japan.

Daiichi Sankyo Espha hopes to capitalise on the fast-growing demand for generic drugs as the government seeks to promote their greater use to offset rising healthcare costs.

The fully-owned subsidiary will build on the expertise gained from the majority stake in Indian generic drug maker Ranbaxy Laboratories. The company acquired Ranbaxy Laboratories in 2008.

According to a Daiichi Sankyo spokesperson, the company is aiming for annual generic drug sales of about 50 billion yen ($560m) by 2015.