As mentioned in previous stories, Daiichi Pharmaceutical Co., Ltd. (Daiichi) was one of the two predecessor companies of Daiichi Sankyo Co., Ltd. (Daiichi Sankyo), and also as mentioned, the word “daiichi” in Japanese means “first”. But did you know that there was also a “Daini Pharmaceutical,” which used the word “daini,” meaning “second”? Daini was established in 1920 only to be closed down a mere three months later. This was all according to plan, however, as it was a deliberate, and clever, maneuver to raise capital and expand Daiichi’s business.
Efficient capital increase through the establishment of a new company and merger
Daiichi was established in 1918 at the end of World War I. An economic depression soon followed, and two years later, the Japanese economy fell into a serious financial crisis compounded by the Japanese stock market’s crash on March 15, 1920.
Despite these circumstances, Daiichi was able to minimize the impact of the economic downturn by reorganizing its predecessor, Arsemin Shokai, from a limited partnership company to a public joint-stock company, thereby strengthening its capital and substance. Sales of Salvarsan (a treatment for syphilis), which was registered under the names Arsemin and Neo-Neo-Arsemin and developed through intense research, were strong. Nevertheless, the company needed to raise capital to mass-produce the products, make a full-scale entry into the industrial chemicals sector, including the raw material, hydrosulfite, and manufacture new drugs.
Under the Commercial Code in Japan at that time, a public joint-stock company could be established by paying a quarter of the capital. However, to increase capital, it was necessary to first complete payment of the remaining balance. In other words, the balance of the original capital had to be paid before the company’s overall capitalization could be increased. A more efficient means of increasing capital was therefore to establish a new company. With that purpose in mind, on March 1, 1920, Daini was established with a capital of 1.5 million yen, a quarter of which was to be paid right away. Then, three months later on June 25 of the same year, a special meeting of shareholders decided to merge Daini into Daiichi, enabling Daiichi to quadruple its capital from 500,000 to 2 million yen of which one-quarter had already been paid.
Embarking on the once-abandoned Neosalvarsan business
Many founders of Daini in fact overlapped with those of Daiichi. The newest addition to this group was the representative of then anonymous (silent) partnership, Kokusan Seiyakusho (Domestic Pharmaceutical Manufacturing) , Yoshiyuki Fujinaga, who was the founder of Fujinaga Yakuhin Shokai—the predecessor of the current Fujinaga Pharm Co., Ltd. Mr. Fujinaga’s participation in the company was not merely to increase capital but also to acquire Kokusan Seiyakusho. Thus, five days after the establishment of Daini, Daiichi acquired Kokusan Seiyakusho and took over its business.
Kokusan Seiyakusho was established for the purpose of manufacturing Salvarsan under the brand names, “Neo-Tanvarsan” and “Jun (pure) Neo-Tanvarsan,” which were perfected by Dr. Keizo Tanba. The name “Tanvarsan” is a combination of the surname of the drug creator, Dr. Tanba, and Salvarsan. Tanvarsan contained “Neosalvarsan,” which Daiichi had focused on during the time of its predecessor, Arsemin Shokai, but had decided not to adopt due to the poor efficacy of the drugs it had tested.
With the acquisition of this business, Daiichi began manufacturing and marketing Neo-Tanvarsan and Jun Neo-Tanvarsan in addition to its previous products, Arsemin and Neo-Neo-Arsemin. Thereby, the commercialization of Neosalvarsan, which was previously abandoned, was realized, the product line was expanded, and the company grew to become a leading manufacturer of Salvarsan.
In a tumultuous period, Daiichi overcame a depression, successfully reengaged in a business it had once abandoned, and remained committed to creating high-quality medicines, creating a legacy of passion and tenacity that have handed down and remain in Daiichi Sankyo to this day.