Dr Reddy's Laboratories is the latest Indian firm looking to expand into the lucrative Japanese market, according to comments made by the Hyderabad-based company’s chief executive.

GV Prasad told the Economic Times that it is looking for a partner to launch its products in Japan by the next fiscal year, noting that “we are talking to a few pharma companies but have not finalised any agreement yet". He added that "the Japanese market represents a great opportunity for generic pharma companies” but acknowledged that it is a complicated sector to get into.

With annual sales of $58 billion, Japan constitutes approximately 11% of the world's pharmaceutical market. However, Indian drugmakers still have very little presence in that country as generics are no way nearly as well-accepted by patients and physicians as they are in the USA or Europe. According to statistics from Frost & Sullivan, generics constitute 3.8% of the total pharma market in Japan in 2006.

However, as the Japan's healthcare costs soars, the government is increasingly encouraging the use of generics. "The government has been pushing for regulatory changes to promote affordable generic drugs," Mr Prasad told the newspaper, noting that a recent amendment to the pharmaceutical affairs law has created a new prescription form with a check box allowing generic substitution when the prescribing doctor approves such a move.

Dr Reddy’s is hoping to catch up with other Indian drugmakers who have targeted Japan as a lucrative market. Ranbaxy Laboratories set up Nihon Pharmaceutical Industry, a joint venture with Nippon Chemiphar and launched its first product in Japan in July 2005, while only last week Lupin Laboratories announced the acquisition of Japanese generic drugmaker Kyowa Pharmaceutical Industry for an undisclosed sum.

Earlier this year, Ahmedabad-based Cadila Healthcare bought Nippon Universal Pharmaceuticals, having first set up a subsidiary in Japan in 2006.