41 - Chugai Pharmaceutical in the United Kingdom

Summary

INTRODUCTION

CHUGAI PHARMACEUTICAL Co Ltd. was founded in 1925 to import medicines primarily from Europe. It successfully evolved into a manufacturer of both prescription and over-the-counter drugs and tonics and from the 1960s started to invest in research to develop its own products. The products, which it developed and commercialized, included drugs for cancer, bone and heart disease: these were sold primarily in the domestic market. By the end of the 1970s Chugai’s management decided that the company should be research driven and should embrace the emerging field of biotechnology. To achieve an adequate return on the investment required to pursue its goals the company needed to access international markets with the products it would develop. The focus on biotechnology led Chugai to license and develop the compound erythropoietin, and subsequently to discover and develop lenograstim, two biological products that established Chugai's leadership in Japanese biotech and would subsequently achieve block-buster status. However, a patent dispute that was resolved in favour of the contesting US company, left Chugai with only limited ability to sell these products in the Japanese and European markets. Chugai first entered the European markets with lenograstim (or ‘Granocyte’) through a joint venture with the French company Rhone-Poulenc Rorer. Despite only limited access to international markets, the domestic market sales of these two products sustained for many years the company's growth and continuing heavy investment in research and development.

By the mid-1980s it was becoming clear that the rapidly increasing costs of drug research and development, in part driven by regulatory requirements for new pharmaceutical products, required companies to recoup the cost of drug development by selling these products in all the world's major markets. In order to achieve its ambitions, Chugai had to transform its hitherto largely domestic business into one capable of developing and obtaining regulatory approval for products in the US and Europe. In support of these ambitions Chugai issued convertible Euro bonds in London, laying the foundations with UK-based investment institutions for a strong international investor base.

CHUGAI IN LONDON

It was against this background that in 1986, Chugai opened its UK Office, its first representative office in Europe. Its primary purpose was to serve as a platform for collecting information about the regulatory, clinical development and market environments in Europe's major markets, as well as to initiate and build relationships with regulatory officials and key clinical opinion leaders.