Taisho Pharmaceutical Co. and Tanabe Seiyaku Co. have given up their plan to integrate under a single holding company due to differences in corporate culture, the two companies said Monday.
During negotiations toward finalizing the integration, the two firms found they had wide gaps of opinion on the purpose of the holding company and plans for the subsidiaries' operations, executives of the two companies said.
Differences in corporate pension programs and computer systems were also cited as sources of disagreement.
"We had wanted to see the fruits of integration at an early stage, but we've realized that settling our differences will take a few years or more," said Akira Ohira, an executive vice president of Taisho. "We concluded that unreasonable integration would lower corporate value."
The two companies declined to give further details.
In September, the two drug makers signed up a memorandum that called for setting up a holding company in April and reorganizing their operations by October to survive intensifying global competition.
Taisho, founded in 1912 in Tokyo, is a major nonprescription drug maker ranked No. 8 in the domestic market. Tanabe, founded in 1678 in Osaka, puts a greater focus on prescription products.