Dr Reddy's Laboratories is linking up with Fujifilm Corp, best-known for its photo prints, to expand into the growing Japanese generics market.

The two companies are to establish a joint venture in Japan with a 51%-49% split in favour of Fujifilm. The as-yet unnamed company will develop, manufacture and promote "competitive and high quality generic drugs".

The JV will draw upon Fujifilm’s "advanced quality control technologies it has built up through its photo film business and Dr Reddy’s expertise in cost competitive production technologies for active pharmaceutical ingredients and formulations", the firms said. It intends to launch its first products in Japan in the next three to four years and will design treatments "that fit the specific requirements of the Japanese market".

Fujifilm's traditional business has suffered as a result of the rise of the digital camera, with fewer people printing their photos, and has stated its desire to become "a comprehensive healthcare company". In February, it acquired the Merck BioManufacturing Network, a US and UK provider of contract manufacturing and development services for the biopharmaceutical industry from US giant Merck & Co.

The Japanese generics market looks to be an attractive one. Copycat drug penetration is low, about 23%, but the government there has expressed its intention to increase that figure to 30% by the end of 2012.

Dr Reddy's and Fujifilm also noted the imperatively high reimbursement prices in Japan; in the first year of listing, the price of generics are set at 70% of the innovator drug and thereafter does not decline anything like as fast as in the USA.