Source: Fortune Magazine
Based on dramatic progress in the life sciences, Kyowa Hakko is developing a new generation of advanced drugs, including anti-cancer treatments, sold worldwide.
The origins of Kyowa Hakko Kogyo Co., Ltd. go back to laboratories established in 1937 that aimed to produce aircraft fuel from sugar. Currently, one seventh of its sales come from its biochemicals division; now company president and CEO, Dr. Tadashi Hirata is excited about the potential of human genome research.
A diverse company? Not really. From the word go, Kyowa Hakko has stuck to one central technology: fermentation. It has manipulated this process to create products such as amino acids as well as anti-cancer drugs used around the world. Now, using genetic information, it is evolving new biotechnology from fermentation. "This is the history of Kyowa Hakko," says Hirata. "We are going to continue to focus on core technologies."
Hirata is now planning to focus that technology on a new generation of advanced drugs and food supplements, based on the recent dramatic progress in information technology and genome science. In particular, he has set out a plan that aims to generate an expected present value (EPV) of 300 billion yen ($2.6 billion) from pharmaceuticals in the 2005-06 business year, and 500 billion ($4.3 billion) in 2010-11. About 1,400 Kyowa Hakko staff -- a quarter of the total -- are engaged in R&D activities, and two-thirds of the company's R&D resources are focused on two therapeutic fields.
"Life science is progressing quickly now," says Hirata. "In our plan, we want to use two strategies: One is to focus on certain therapeutic fields; the other is to focus on certain technologies such as antibodies."
Those therapeutic fields are cancer and allergies, and Kyowa Hakko has a strong background in both. One early example was Mitomycin C, a cancer drug that became widely used throughout the world. Since then, Kyowa Hakko has marketed a range of anti-cancer drugs, including Navelbine, an anti-cancer agent launched in 1999, and Durotep, an analgesic for persistent cancer pain that will go on the market later this year. In the anti-allergy market, the company followed up its formerly best-selling Celtect with the release of Allelock this March. Over the next five years it plans to fuel the pipeline of promising anti-allergy compounds with novel action mechanisms.
Research into the human genome is crucial for future developments. One way Kyowa Hakko plans to use this knowledge is to create novel pharmaceuticals by making antibodies against surface protein. Most such research over the next decade will be aided by a network of collaborators -- in Japan, in the rest of the world, and in universities and bioventures. "Cancer is said to be a genetically inherited disease," explains Hirata. "So it is very easy to tie the gene research to cancer treatment drugs. If we find the cause of a specific cancer, we can pursue a treatment effectively."
Another part of the 10-year plan is overseas expansion to meet demand from the fast-growing U.S. and European pharmaceuticals market. Kyowa Hakko is planning to boost staff numbers in its U.S. and U.K. units in order to strengthen the base for clinical development and then sales in those countries. Kyowa Hakko also plans to start clinical trials in China. "It's important to remember that we cannot do everything alone with cutting-edge technology, " says Hirata. "So we have to form alliances all over the place." In other words, branch out - but stick to the same areas.