TOKYO Ono Pharmaceutical Co cut its annual profit outlook by a quarter on Wednesday, hit by the Japanese government's decision to halve the price of cancer drug Opdivo that it co-developed with Bristol Myers Squibb Co.
Last month, the government halved the price of Opdivo, which has been approved in Japan to treat advanced melanoma, non-small cell lung cancer and kidney cancer, on fears that a rapid uptake of the medicine would prove an intolerable burden on the national health insurance system.
The cut, which will be effective from February, brought the price more into line with pricing in the United States and the Japanese government was widely seen as having initially priced it too high.
Ono now expects a net profit of 41.8 billion yen ($355 million) for the year ending in March, down from its forecast of 55.8 billion yen forecast in May.
It lowered its annual sales forecast for Opdivo to 105 billion yen from 126 billion yen, also factoring in the launch of Merck & Co's rival non-small cell lung cancer treatment Keytruda.
A spokesman for Ono said that Bristol Myers Squibb is entitled to 4 percent of Opdivo's revenue in Japan with the rest going to Ono. The situation is reversed in the United States with Ono receiving just 4 percent of Opdivo's revenue there.
Japan this week said it will step up the pace and expand the scope of drug price reviews, one of the most aggressive measures it is taking to rein in ballooning healthcare costs for a rapidly ageing nation.
($1 = 117.4800 yen)
(Reporting by Taiga Uranaka; Editing by Edwina Gibbs)