3 Doshomachi 4-chome
Fujisawa Pharmaceutical Company is one of Japan's oldest and largest drug manufacturers. Although management positions continue to be held by descendents of founder Tomokichi Fujisawa, the nearly 100-year-old company operates as a modern corporation. Innovative technology, coupled with an international orientation, are the major elements in Fujisawa's successful business approach.
In 1894 Fujisawa Shoten opened in Osaka as a private dealership in medicinal herbs. The business expanded rapidly during the early decades of this century, its success based on the production of such widely used compounds as Camphor, a stimulant, and Santonin, a treatment for intestinal worms. Even though the company faced shortages of ingredients during World War II, it continued to prosper. It adopted its current name in 1943.
Along with the rest of the pharmaceutical industry, Fujisawa experienced unprecedented growth in postwar Japan, mainly as a producer of antibiotics (by 1961 antibiotics accounted for 10.3% of Japan's total drug production). Because Japan had no effective patent laws, and the results of highly expensive research and development could be easily pirated, Japanese pharmaceutical companies tended to import the technology to manufacture antibiotics and other medicines from abroad.
Fujisawa has always shown an impressive ability to establish good working relations with foreign firms. In 1953 Fujisawa signed a contract with the Italian company Carlo Erba to sell a broad spectrum antibiotic, Kemicetine, in Japan. Other such licensing arrangements have involved Irgapyrin, an anti-arthritic drug from Geigy of Switzerland, and a local anesthetic, Xylocaine, from the laboratories of Astra in Sweden. Fujisawa has also developed a number of successful drugs on its own--for example, Trichomycin, an antibiotic used in the treatment of candidiasis and trichomoniasis.
Besides the production and sale of antibiotics, Fujisawa has been notable for its work with vitamin preparations. The pure synthesis of thioctic acid in company laboratories led to a highly successful product marketed as Tioctan. Neuvita, a longer-acting vitamin preparation, was added to the product line in 1961 after the firm developed a process to combine thioctic acid with vitamin B1. This new product, helpful in the treatment of liver disease, was well received by both physicians and the general public.
At the forefront of producing and marketing antibiotics and vitamins, Fujisawa reaped financial rewards. With antibiotics accounting for more than 10.3% and vitamins totaling more than 20% of the Japanese pharmaceutical industry's entire drug production in 1962, Fujisawa enjoyed an increase in profits of 2.5 times its 1961 results.
In the late 1950's and throughout the 1960's Fujisawa continued to expand its product line, expanding, too, into non-pharmaceutical items, such as antioxidative food additives. The company's continued expansion in the 1960's--like that of many other Japanese pharmaceutical concerns--can also be attributed to the regulations of the National Health Insurance System established by the government in the early part of the decade. With the implementation of this program, the burden of public health costs fell upon the government; people began to visit their doctors more frequently. With more patients, doctors prescribed more drugs. Because doctors operated their own drug dispensaries, the Ministry of Health and Welfare set official prices at which they would be reimbursed. These official prices were often higher than the purchase price: the profit involved obviously did not discourage doctors from generously prescribing drugs.
Even as Fujisawa experienced record growth and profits, it continued, as did other Japanese pharmaceutical firms, to depend on foreign research and production technology. The result was a huge trade deficit between imported and exported drugs. The government, recognizing the potential of an active domestic pharmaceutical industry, implemented a number of measures to encourage export and to ensure that Japanese companies could withstand foreign competition. These measures included the tightening of patent laws and a restructuring of official drug pricing, which put innovative drugs at a premium.
Fujisawa's expenditure for research and development thereafter increased dramatically as it searched for lucrative patentable products. Two new drugs to emerge from company laboratories at this time were Pyroace, an antibiotic, and Padrin, an antiseptic. By 1966 company profits were nine times what they had been a decade before, with newly-developed products accounting for between 40 to 50% of total sales.
Fujisawa now looked to foreign markets as a means of recouping its huge investments in new products. A technical co-operation agreement with Delagrange in France led to Fujisawa's licensing the manufacture and sale of the drug Primperan. In the non-pharmaceutical division, the company began to export a leavening agent for baked goods. Both of these products were well received in foreign markets.
As technology began flowing from East to West, foreign companies became particularly interested in a new class of potent antibiotics developed by the Japanese. Known as third-generation cephalosporins, these antibiotics are particularly important for their ability to combat the highly-resistant strains of bacteria found in hospitals. In 1970 Fujisawa became the third company in the world to develop the cephalosporin "Cefamezin." Their new drug, called Cefazolin, was introduced in 1971. A joint venture between Fujisawa and SmithKline Beckman in 1977 has led to the introduction of Cefazolin and other Fujisawa antibiotics on the American market. This agreement also entitled Fujisawa to sell innovative SmithKline drugs in the Japanese market--including Tagamet, SmithKline's well-known anti-ulcer drug, and Auranofin, its popular anti-arthritic medication.
Fujisawa opened an American subsidiary in 1977 and established a London office in 1979, and it was during this time that Mutsuya Ajisaka, Fujisawa's director of planning and co-ordination, outlined a new company strategy. Although much of the firm's overseas success had so far been achieved through licensing arrangements, henceforth Fujisawa would participate in more direct marketing of its products. Ajisaka also felt that antibiotics, including cephalosporins, though continuing to achieve huge sales, had saturated the market; the company should concentrate its research in other areas. Within a few years, calcium blockers, a new class of potent drugs, emerged from Fujisawa's laboratories. These pharmaceuticals, which prevent blood vessels from constricting, are used to treat angina pectoris and hypertension.
By 1982 the per capita drug bill in Japan had reached the equivalent a nearly $100. In an effort to counter excessive profiteering and to alleviate national expenditures on medicine, the government began reducing the price of drugs. By 1987 prices had dropped 50%, and patients were now required to pay 10% of examination costs.
This structural change in the National Health Insurance System almost immediately affected Fujisawa. Profits declined because demand declined. In 1985 alone the drug price decrease led to an average 5% reduction in demand for Fujisawa's products. Against this background, Fujisawa also found itself competing in a more crowded marketplace and suffering, with other pharmaceutical companies, increased costs for research and development.
Despite these difficulties, Fujisawa remains a strong and innovative competitor within the international pharmaceutical industry. The company introduced six new drugs in 1986, and it is now strongly committed to developing a new class of drugs appropriate for Japan's growing geriatric population. One such drug, Gramalil, is used to treat psychotic disturbances in the elderly. Fujisawa has also recently developed an anti-tumor substance from soil bacteria, a drug that has been shown to be effective in treating leukemia and melanoma in laboratory animals.
Principal Subsidiaries: Doei Co. Ltd.; Fujihan Co. Ltd.; Hoshienu Pharmaceutical Co. Ltd.; Izumisha Co. Ltd.; Hoei Pharmaceutical Co. Ltd.; Daiichi Yakuten Co. Ltd.; Imasan Sangyu Co. Ltd.; Shinwa Building Co. Ltd.; Fuji Tanso Co. Ltd.; Daisan Kogyo Co. Ltd.; Smithkline and Fujisawa K.K.; Klinge Pharma GmbH.
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