Kuraya Corp., Sanseido Co. and Tokyo Iyakuhin K.K. have agreed to merge next April 1 to create the nation's largest pharmaceutical wholesaler with sales of 918 billion yen for fiscal 2000, the three firms said Tuesday.

Kuraya Corp is the nation's No. 2 wholesaler in terms of sales after Suzuken Co., a Nagoya-based pharmaceutical wholesaler with sales of 640 billion yen in fiscal 1998.

The share-swapping ratio of Sanseido, Kuraya and Tokyo Iyakuhin will be 1:1.7:1, and Sanseido, a Kobe-based firm that is listed on both the Osaka and Tokyo bourses, will be the surviving company, the three firms said.

The three firms cited the pharmaceutical industry's shrinking domestic market as one major reason for the merger.

Amid government moves to lower prices of medicines, all nine major drugmakers reported decreases in sales or profits on midterm earnings for fiscal 1998.

Kuraya has a strong footing in the Tokyo metropolitan area, while Sanseido is the No. 1 wholesaler in the Kinki region.

The three firms said they will efficiently offer medicine-related services across the country, and modernize and streamline their distribution systems through the merger.

Sanseido President Takashi Yamada will head the new firm, tentatively called Kuraya-Sanseido, and Kuraya President Sadatake Kumakura will be executive vice president, the three firms said.

According to a projection by the firms, the new company, capitalized at 10.7 billion yen, will post 918 billion yen in sales and 16.9 billion yen in pretax profits for fiscal 2000, and 965.5 billion yen in sales and 19 billion yen in pretax profits for fiscal 2001.