Daito Pharmaceutical to Merge Kyorin's Generic Drugs Into New Venture, Warns of Unprofitable Parkinson's Pill

Daito Pharmaceutical, a mid-tier Tokyo-listed generic drugmaker, told investors it has reached a basic agreement with two other companies to form a new joint venture that would absorb Kyorin Pharmaceutical's generic drug business. The venture, tentatively named the Pharmaceutical Co-Creation Organization, is meant to shore up Japan's supply of generic medicines and give Daito a sturdier footing as what it calls a "research-and-development-oriented contract manufacturer". So far the companies have disclosed only the basic agreement; valuation, ownership split and a closing date remain unannounced.

The deal sits inside a broader consolidation drive. Under Daito's mid-term plan, a nine-member "New Consortium" of drugmakers has already discontinued or substituted 57 products and consolidated manufacturing for 64 more, an attempt to escape the low-volume, many-item generic production model that squeezes margins across thousands of near-identical pills.

Even as it builds scale, Daito used its earnings materials to flag a pricing problem it says Tokyo has not fixed. Dopacol, its levodopa-carbidopa combination tablet for Parkinson's disease, covers roughly 70% of the Japanese market across all stages of the illness. Three consecutive years of annual drug-price revisions have made the tablet structurally loss-making, Daito says, even though the gap between its listed and market price clears the threshold that normally triggers relief under Japan's "unprofitable item repricing" system, which the company says has not been applied to Dopacol. The combination pill has also been left off the government's "supply-secured medicines" category C list, which covers only the single-agent levodopa version, not the combination drug that dominates actual prescribing. Two Democratic Party for the People lawmakers raised the issue in the Diet this spring: Shinji Nagatomo in the Lower House Budget Committee on March 2, and Mami Tamura in the Upper House Health, Labour and Welfare Committee on March 24. Their questions were blunt: if Daito, which supplies most of the market, walked away, Japan would face an immediate nationwide shortage of a drug with no easy substitute.

The venture and the pricing complaint arrive alongside a solid year for Daito itself. Sales for the year to May 2026 were essentially flat at ¥50.65bn, but operating profit rose 38.8% to ¥3.64bn, helped by sales of Opalmon tablets acquired from Ono Pharmaceutical and by inventory cleanup that cut the cost-of-sales ratio from 82.9% to 80.5%. Net income climbed 65.7% to ¥3.16bn, and operating cash flow hit a record ¥9.38bn, up 59% on the year. The dividend rises to ¥40 a share for the year just ended, with a further increase to ¥45 planned for the year to May 2027.

For next year Daito is guiding to sales of ¥54.0bn and operating profit of ¥4.0bn, while flagging continued pressure from annual price cuts and costlier raw materials. Net income guidance actually falls 5.1% to ¥3.0bn, a sign that the company's own forecast does not assume its pricing complaint gets resolved soon.