Taisho of Japan, the country’s leading producer of over-the-counter drugs, has cut its earnings forecast for fiscal 2006, blaming increases in R&D and selling costs and a poor showing by some of its consumer health products in Japan.

The drugmaker now expects sales to reach 202 billion yen ($1.69bn) down nearly 10% on fiscal 2005 and 15 billion yen shy of its earlier forecasts. The forecast for operating income has been cut from 38.5 billion yen to 25.5 billion yen, down 43% year-on-year.

Taisho’s self-medication unit is struggling from the double whammy of pricing pressure and weaker demand for its flagship tonic drink Lipovitan D, despite higher spending on promotion, and the failure of hair re-growth treatment RiUP (minoxidil) to meet its targets.

On the earnings side, the main damage has come from in-licensing costs, as Taisho has been bolstering its pipeline of late, for example by securing co-marketing rights to osteoporosis drug ibandronic acid from Chugai and licensing an anti-inflammatory analgesic patch delivering s-flurbiprofen from Tokuhon.