Japanese Drug Firms Broaden Product Focus : Pharmaceuticals: The companies are moving away from a heavy reliance on antibiotics.

Japanese physicians are notorious for over-prescribing antibiotics, but they are being slowly weaned of the practice, and drug makers that have relied on antibiotics are scrambling to find alternative profit centers.

Fujisawa Pharmaceuticals is among the companies that have been funneling upward of 10% of sales into research and development in a bid to reduce excessive dependence on Japan’s shrinking antibiotics market.

Antibiotics now account for over a third of sales and half of profit at Fujisawa, a dangerously high dependence on a market that peaked in the early 1980s.

The market will continue to decline amid government-mandated price cuts and growing concern over excessive use of antibiotics, analysts said.

With the writing clearly on the wall, Fujisawa has started to pour money into R&D; in hopes of finding products to sustain growth into the next century. R&D; spending was 29.3 billion yen ($230 million) in the year to March 31. “They have made a credible effort,” said Philip Hall, an analyst at Baring Securities. But the company’s reliance on antibiotics “is a problem, and it will continue to be a problem.”

Fujisawa still faces several lean years until the drugs on which it has pinned its hopes prove themselves in the market, the analysts said.

Even if sales pan out, the new drugs won’t start contributing to the bottom line until the end of the decade.

In Japan, doctors have traditionally been quick to prescribe antibiotics, partly because the Japanese system gives them a share in profits from drug sales. But price reforms instituted this year will make it increasingly tough to maintain profits from antibiotics sales, analysts said.

At the same time, concern over the emergence of antibiotic-resistant diseases has alerted Japan’s health authorities to the dangers of excessive use of antibiotics. The Health and Welfare Ministry is studying the problem and may come out with measures to curb antibiotic use, said Joel Scheimann, an analyst at Kleinwort Benson International.

As it tries to wean itself away from the antibiotics market, the biggest question mark for Fujisawa is the drug FK-506, designed to suppress the immune system to prevent rejection of transplanted organs. The drug, still undergoing tests, has fallen short of high initial expectations.

FK-506 appears to be useful for liver transplants but its effectiveness for kidney transplants, which account for 75% for the transplant market, is still unclear, said Hall. The drug will be a more limited profit center for Fujisawa if it can’t be used for kidney transplants, he said.