Dainippon Pharmaceutical Co. and Sumitomo Pharmaceuticals Co. said Thursday they have reached a basic agreement to merge next Oct. 1, creating one of the 10 biggest pharmaceutical companies in the nation in terms of sales.
Dainippon will be the surviving entity in the deal, which would give Sumitomo stock holders 1,290 Dainippon shares for each Sumitomo share.
Behind the merger accord is an increasingly difficult business environment for drug firms, including huge costs for developing new medicines, the partners said.
Earlier this year, Yamanouchi Pharmaceutical Co. and Fujisawa Pharmaceutical Co. said they would merge on April 1 into Astellas Pharma Inc., which will be the second-largest Japanese drug maker in terms of group sales.
Dainippon and Sumitomo said the merged company will have a staff of 1,500 medical representatives, a comparable level for major Japanese drug makers, and will be able to promote the development of new drugs by combining investment and technologies.
The merged company, whose name has yet to be decided, will be a consolidated subsidiary of Sumitomo Chemical Co., which holds an equity stake of nearly 78 percent in Sumitomo Pharmaceuticals. The three companies will make arrangements so the major chemical maker will have a stake of 50.1 percent in the merged firm.
Sumitomo Pharmaceuticals President Yasuo Okamoto will become chairman at the merged firm, while Dainippon President Kenjiro Miyatake will lead its day-to-day operations as president.