Sumitomo Pharma - Company History

Sumitomo Pharma began in May 1897 as a subscription. Twenty-one leading drug merchants of Doshomachi, the Osaka street where wholesalers of medicine had clustered since the Edo period, put up ¥100,000 between them and founded Osaka Seiyaku. Japanese-made medicines of the day were undercut by imports and by cheap, unreliable domestic imitations; the answer was a factory, and no single merchant house could carry that investment alone. A year later the company built its plant at Ebie, outside Osaka, bought the Tokyo firm Dainippon Seiyaku — a state-subsidised venture of 1883 and the first pharmaceutical company in Japan — and took its name.

The origin mattered more than the products. A company assembled by twenty-one subscribers had no founding family to protect and no doctrine of independence to defend; what it had instead was a habit of combining with others to make up for what it could not do alone. That habit runs through everything that follows.

The early line was galenicals — tinctures and syrups. In 1903 the company added alcohol and became the first in Japan to make anhydrous alcohol, whose quality carried it through the slump after the Russo-Japanese War. It absorbed the Osaka Drug Testing company in 1908, becoming the only private laboratory licensed to test and repackage medicines and hygiene goods; began narcotics manufacture in 1917 as a designated buyer of state opium; and in 1927 launched ephedrine hydrochloride, discovered by Nagai Nagayoshi, as an asthma treatment. Branches in Mukden and a plant in Hsinking followed the army into the continent, and the war destroyed them.

Rebuilding meant retrenchment — a 1950 rationalisation that cut staff and closed plants — and then partnership. From 1952 the company licensed from foreign firms: the ulcer drug Banthine and the antihypertensive Ecolid came from G. D. Searle, and a joint venture with Abbott produced Dainabot Radioisotope Laboratories and a business in radiopharmaceuticals. It listed on the Osaka and Tokyo exchanges in 1949 and was assigned to the First Section of the Tokyo Stock Exchange in 1961; the Suzuka plant (1968) and the Osaka research centre (1971) gave it a two-site structure for making and discovering synthetic drugs.

That structure worked for eight decades of independence, but it was sized for a mid-tier firm, and by the 1990s the research bill for a new drug had outgrown the position. Takeda, Daiichi Sankyo and Astellas were spending over ¥100bn a year on R&D; Dainippon was not. In January 1993 it opened Dainippon Pharmaceutical U.S.A. in California — a single small entity, with overseas sales still in single digits as a share of the total, but a window of its own onto American licensing and clinical development.

The end came as a subtraction. In April 2003 the Osaka plant — the company’s original works, running since 1898 — was closed and production consolidated at Suzuka. For the year to March 2004 consolidated sales were ¥170.8bn and recurring profit ¥10.1bn. At that scale a company cannot keep a new-drug pipeline turning indefinitely, and management said so; the closure of the founding site and the decision to merge are two readings of the same arithmetic.

In October 2005 Dainippon Pharmaceutical merged with Sumitomo Pharmaceuticals of the Sumitomo Chemical group to form Dainippon Sumitomo Pharma, taking on the Ibaraki, Ehime and Oita plants, the Osaka research site and Sumitomo Pharmaceuticals (Suzhou) in China. Miyatake Kenjiro became its first president, succeeded by Tada Masayo in 2008. The logic was two-sided: Dainippon’s synthetic-chemistry portfolio was complemented by Sumitomo’s promising candidates in central nervous system and cardiovascular disease, and the group’s balance sheet would fund an American push that neither could have afforded alone. Sales reached ¥245.8bn in FY05 and ¥264.0bn by FY07.

One of the inherited candidates decided the next fifteen years. Lurasidone — later Latuda — an atypical antipsychotic, showed strong Phase III results in the United States, and how to sell it there became the central question of the merged company. In October 2009 Dainippon Sumitomo bought Sepracor Inc. for about $2.6bn, later reorganised as Sunovion, acquiring an American psychiatric sales organisation outright. Latuda was approved and launched in the US in 2010; FY10 sales jumped to ¥379.5bn, roughly 1.5 times the level at the merger only four years earlier.

Success then justified more of the same. Boston Biomedical (2012), Cynapsus of Canada with the Parkinson’s rescue drug Kynmobi (2016) and Tolero Pharmaceuticals (2017) were bought in oncology and neurology; FY17 operating profit hit a record ¥88.1bn. In December 2019 the company put about $3bn into taking control of Sumitovant Biopharma from Roivant Sciences, acquiring Orgovyx, Myfembree and Gemtesa in one package as Latuda’s designated successors. FY21 sales of ¥560bn were more than double the merger-year figure — and the loss of US exclusivity on Latuda was one year away.

In April 2022 the company renamed itself Sumitomo Pharma and moved to the TSE Prime Market; president Nomura Hiroshi framed the new name around discovery plus new fields such as robotics and regenerative medicine. Six months later the second-quarter results carried a ¥54.4bn impairment on Kynmobi, the 2016 acquisition, and a quarterly operating loss of ¥28.9bn. Nomura conceded the original judgement had been wrong — the company had targeted peak sales of $500m and landed far below — blaming an overestimate of the addressable Parkinson’s population and oral safety problems with the sublingual film. The write-down was less an isolated event than the moment the market stopped taking the North American acquisition plans at face value.

FY23 settled the account: on revenue of ¥314.6bn, a net loss of roughly ¥315bn, as the plans for Orgovyx, Myfembree and Gemtesa collapsed and the Sumitovant goodwill and intangibles were written off almost in a single stroke. Nomura’s departure and the promotion of vice-president Kimura Toru were announced the same day — an unusual joint appearance that signalled Sumitomo Chemical taking the pharmaceutical business back in hand. The restructuring matched the write-off in scale: North American headcount cut from 2,200 to 1,200, $500m of dollar-denominated SG&A removed, ulotaront handed to Otsuka, the pipeline trimmed from 22 projects to 17, and seven US entities folded into Sumitomo Pharma America. Eighteen years of expansion were compressed in one.

FY24 reversed it: revenue ¥398.8bn, core operating profit ¥43.2bn and net income ¥23.6bn — a ¥338.6bn swing from the prior year, as Orgovyx and Gemtesa outran the assumptions the impairment had been based on. In May 2025 the Reboot 2027 plan drew the new perimeter: the China and Asia businesses sold to Marubeni Global Pharma in two tranches for $481.1M (¥72bn) in total, the frontier businesses to Sawai Group Holdings, and resources concentrated on the United States and Japan, the two markets where new drugs are sold. The one small American entity opened in 1993 had become the company; almost everything else was let go.