Chapter 4 Eisai's Rapid Expansion

(from left) President Yuji Naito, Chairman Toyoji Naito, and Executive Vice President Tatsuo Naito

Eisai was now achieving unprecedented rapid growth. During this time, on May 14, 1966, Yuji Naito was entrusted with taking the helm as Eisai's new president.

In the years that followed, Japan enjoyed a period of high economic development and internationalization and Eisai was able to establish a nationwide distribution network based on branches in 12 locations: Sendai, Tachikawa, Yokohama, Shizuoka, Kanazawa, Kyoto, Kobe, Wakayama, Okayama, Hiroshima, Takamatsu and Kumamoto. Furthermore, continuing down its path of development and infrastructure enhancement, which was already off to a promising start with the company reaching its annual sales target of US$100 million (¥36 billion) three years ahead of schedule in 1971, Eisai was soon able to move ahead with its plans for overseas expansion as well. With its global strategy now moving into full swing, Eisai also changed its corporate logo from its Roman-and-Japanese, two-script design to a more globally recognizable logo that unified the name to “Eisai” displayed in black, Roman letters.

Eisai's Puncak Plant, located 90 km from Jakarta and 1.4 km above sea level in Puncak, Indonesia

Eisai's overseas expansion first began in Asia. Under Eisai's first president, Toyoji Naito, the company had already expanded its export business in a number of countries in Asia, exporting branded products via local representative offices in Naha (Okinawa, then under U.S. rule), Taipei, Hong Kong and Bangkok. During Yuji Naito's presidency, Eisai pursued even more aggressive capital investment into Asia, including the establishment in fiscal 1969 of subsidiaries in Taiwan, Thailand and Indonesia.

With the largest population in Southeast Asia, Indonesia was and is a major market with much potential. As part of its Southeast Asia strategy, Eisai selected Indonesia as the country in which to establish its first overseas production site. Named the Puncak Plant after the spectacular scenic region in which it is located, which sits some 1.4 km above sea level, the plant in Puncak operates on a site 90 km outside of Jakarta and would later pave the way for Eisai's first overseas production venture.

Eisai was recognized for its corporate activities aimed at overseas expansion in fiscal 1969, when it received an award for its corporate contribution to Japan's export industry presented by the then Minister of International Trade and Industry.

Toyoji Naito had long lamented the fact that rather than developing original world-class medicines, the Japanese pharmaceutical industry relied heavily on importing and imitating European and American ideas. In 1969, Toyoji established the Naito Foundation. At the time, although research with practical applications could and did find funding in Japan, it was difficult to find support for more basic scientific research. This meant that even highly skilled scientists in the country would find themselves unable to do the research that was needed to develop original new products in Japan. The foundation was thus created to remedy this situation—to usher in a new era in Japanese pharmaceutical innovation—with the same vision for the country that Toyoji Naito had had when he founded Eisai's first predecessor, the Sakuragaoka Laboratory, in 1939.

(left) Toyoji presenting a progress report during a meeting with the Naito Foundation executive committee

Under the leadership of Eisai's second president Yuji Naito, which coincided with a period of sweeping economic prosperity and internationalization in Japan known as the Izanagi Boom, Eisai's ranking in terms of sales among the twelve largest domestic pharmaceutical manufacturers had climbed to sixth place by 1969. However, on entering the 1970s, Japan's domestic market was impacted by a combination of a structural recession and multinational pharma companies entering the domestic market following the complete liberalization of capital transactions in Japan. Furthermore, the country's pharmaceutical industry was also affected by the oil crisis of 1973. The overall result was that the business climate for Japanese drug makers faced a complete turnaround and headed into a period of low growth. Eisai was no exception.

During this period, the most notable new drug developed by Eisai was the metabolic cardiotonic agent Neuquinon. Launched in April 1974, it boasted the coenzyme Q₁₀ as its main ingredient and had undergone over a decade of R&D at Eisai since its initial discovery in the United States in the late 1950s. The concept behind Neuquinon was entirely different from conventional medicines used to treat heart failure at the time, and worked biochemically on the heart to help it produce the energy needed to pump blood. Although the unprecedented mechanism possessed by the drug did not immediately catch on, promotional efforts based on reputable case studies gradually paid off as more and more clinical physicians came to understand the benefits of the drug. With the creation of Neuquinon, Eisai had now successfully entered into the cardiovascular field, helping the company to survive Japan's low-growth period as well as sustain its operations going forward.