Snow Brand Milk Products Co. will spin off its prescription pharmaceutical division into a joint venture to be launched with Otsuka Pharmaceutical Co. by the end of March to make nutritional supplements for clinical use.

The spinoff is part of Snow Brand Milk's attempt to restructure in the wake of a beef-labeling scandal that brought down subsidiary Snow Brand Foods Co. and a fresh scandal over expired butter used to make other products.

The firm, the location of which has not been decided yet, will be capitalized 40 percent by Snow Brand Milk and 60 percent by Otsuka Pharmaceutical, Snow Brand said Tuesday.

Otsuka will dispatch one of its executives to become president of the new firm.

But Otsuka officials said the company does not plan to support Snow Brand itself or get further involved in its rehabilitation process.

The two companies have been jointly developing nutrient agents since forming a business alliance in 1990.

In addition to the pharmaceutical research and development divisions of the two firms, Snow Brand Milk's factory in Iwate Prefecture which produces the agents, will be transferred to the new company along with its 110 employees, Snow Brand Milk officials said.

Snow Brand Foods Co., which is owned 65 percent by Snow Brand Milk, admitted in January to passing off imported beef as domestic beef to benefit from a government buyback scheme introduced after the discovery of mad cow disease in Japan in September.

The scandal dealt an additional blow to Snow Brand, which suffered from plummeting sales in 2000 after a milk-poisoning scandal sickened thousands.