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Drug Company Merger Tops Japanese Business News - 2004-02-27

Two Japanese drug companies are merging and the country's trade surplus has powered ahead.

An $8 billion merger in the pharmaceutical industry is the top business story from Japan this week. The country's third-largest drug maker will buy a smaller rival in one of the 10 largest acquisitions ever to take place in Japan.

The merger between Yamanouchi Pharmaceutical and Fujisawa Pharmaceutical will create a powerhouse with annual sales of more than $7 billion.

Profits at both companies have suffered recently as international rivals entered Japan's market. With a rapidly aging and relatively wealthy population, it is the world's number two market for pharmaceuticals, second only to the United States.

Yamanouchi's President Toichi Takenaka told reporters that the deal will allow the merged company to better compete for market share.

He says the merger will allow them to offer new products and survive in an increasingly competitive market.

He also hopes the deal will lead to an expanded overseas presence and eventually to a leading role in the global pharmaceutical market.

In the auto sector, two Japanese carmakers boosted global output in January, while a third suffered a decrease. Toyota Motor says production climbed 10 percent to nearly 530,000 vehicles compared with a year ago.

For Nissan Motor, global production grew 9 percent to about 250,000 vehicles. Brisk demand in the United States and Europe helped both companies.

But global output for Honda Motor contracted 9 percent, mostly due to sluggish sales in the United States.

Japan's trade surplus continues to surge. It rose nearly five-fold in January from a year earlier as exports to Asia, especially to China, expanded.

The surplus, the broadest measure of Japan's trade with the rest of the world, totaled $4.7 billion, well ahead of economists' forecasts.