Wednesday, January 09, 2008

Daiichi Sankyo sets up manufacturing & research unit

Economic Times recently reported that Daiichi Sankyo had set up a FULL FLEDGED manufacturing unit in India. This marks the first such large scale initiative in manufacturing in recent times, a welcome news from non-services sector player. Editor
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5 Jan, 2008, 0103 hrs IST,Khomba Singh, TNN

NEW DELHI: The $8-billion Daiichi Sankyo Company, Japan’s second-largest pharma company, is in the process of setting up a full-fledged manufacturing and research operation in the country.

Although there are some Japanese pharma companies who have operations in India, their presence is largely limited to marketing of products independently or through local partners.

According to sources, Daiichi Sankyo will operate through a wholly owned subsidiary, Daiichi Sankyo India Pharma. The company plans to initially outsource its manufacturing to local manufactures but later on, it will set up its unit. The company would initially invest Rs 25 crore in its newly-formed subsidiary.

In addition, the Japanese parent also plans to supply and market its patented products in the Rs 30,000 crore pharma retail market in the country. Daiichi Sankyo has a strong focus on research and drug discovery and it plans to set up a research unit in India in future.

However, it would not get into pharma retailing as Indian regulations don’t allow foreign companies to directly sell to consumers. Faced with margin pressure, many American and European companies have either set up or expanded operations in India to tap the low-cost and local talent for drug manufacturing and drug discovery. However, Daiichi Sankyo would be the first major Japanese company to set up large scale operations in the country.

Sankyo, which merged with Daiichi in 2005, has a small joint venture in India. Its 39.9% holding in Unisankyo Company was brought under the merged entity. The remaining 60.1% stake in this venture is held by a group of local promoters led by Jay Soman. The JV manufactures and markets bulk drugs, pro-biotics and few pharmaceutical products.

It is learnt that through the new wholly-owned subsidiary, Daiichi Sankyo will primarily get into pharma products and formulations in cardiology and diabetology — areas where the existing JV Unisankyo is not present.

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