Like other drugmakers, Pfizer is grappling with growing risks of a slump in earnings on patent expirations, e.g. for their billion-dollar-plus blockbuster Lipitor, coupled with rising regulatory and scientific bars for bringing next-generation drugs to the market. The US company's Japanese unit planned to set up a division on 1 December 2009 dedicated to drugs whose patents have expired, Japanese business daily Nikkei reported.

As a start, this division will handle sales of roughly 70 Pfizer patent-expired drugs. It will later reportedly apply for sales licenses for generic drugs based on other firms' expired patents and begin selling them as approval is granted. Pfizer aims to boost its Japanese line-up of generic drugs to more than 100, the report said. Pfizer is also considering making the products in India and elsewhere, Nikkei said. Pfizer is ranked seventh in the Japanese prescription-drug market, but its sales in the country have also been in a downtrend.

Switzerland's Novartis, which acquired a local maker of generic drugs in 2005, is currently the only major foreign pharmaceutical firm handling generics in Japan.

Amid these challenges, Pfizer has merged with Wyeth, another major drugmaker, and also launched generic drug businesses in Europe and the US earlier this year, using its rights to generic drugs made by firms such as India's Aurobindo Pharma.

“Pfizer is considering entering the generic drug market in Japan as it seeks to diversify its business operations to build a stronger earnings structure,” a spokesman at Pfizer's Japan unit said, but added that it will prioritise its patented drugs.

Pfizer said in May 2009 its license deals with Aurobindo and Claris Lifesciences would allow it to sell 60 generic products in more than 70 countries throughout Africa, Asia, Latin America, and the Middle East and more than 100 products across Australia, Europe, New Zealand and North America.

The Japanese market for generic drugs – estimated at around Yen 400 billion (US$4.5 billion) in 2009 – has great growth potential, since generics account for just about 20% of overall drug sales in volume terms compared with more than 50% in European and the US markets, the Nikkei report said. The Japanese market for generic drugs is expected to total Yen 515 billion (US$5.8 billion) in the year to March 2010 and to expand to Yen 705 billion (US$7.9 billion) in three years, according to Sawai Pharmaceutical, Japan's No1 generic drugmaker.

Japan is promoting generics as part of its efforts to reduce healthcare costs, but a plan by its new government to cut prices for branded drugs – which reduces the price advantage of generic drugs – may hinder the market's growth, Sawai's President Mitsuo Sawai said in a recent interview.

References:
Tracy Staton. Pfizer aims for Japanese generics market. FiercePharma. 2009 November 19.

Yumiko Nishitani. UPDATE 1-Pfizer says may enter Japan generic drug market. Reuters. 2009 November 19.

Pfizer reportedly to sell generic drugs in Japan. MarketWatch. 2009 November 18.