Kirin brews up cell therapy treatments

By CNN's Kristie Lu Stout

TOKYO, Japan (CNN) --To wash away the flat taste of its beer business, Japan's Kirin Brewery is tapping into cell therapy development.

Kirin plans to develop cell therapy procedures that use specially cultivated human cells to treat diseases like multiple myeloma, a condition that creates bone marrow tumors.

The maker of the best-selling Kirin Lager and Ichiban Shibori has been expanding its pharmaceuticals business to offset mounting competition and a slump in domestic beer sales.

Dendritic technique

The brewery aims to begin clinical trials by June, with hopes to see its pharmaceutical advances introduced to hospitals by 2005-06, according to the Nihon Keizai Shimbun.

Kirin licensed its cell therapy technique from the U.S.-based biotech firm Dendreon.

The technique involves extracting a patient's dendritic cells, a specialized class of cells that initiate the immune response.

The extracted cells are then returned to the body after being activated to stimulate vigorous immunity and fight cancerous tumors.

Kirin has also exported cell therapy instruments to China and Korea, ahead of domestic development of the sector.

Diversifying into biotech

Kirin has expanded its beer worldwide, investing in brewers like Lion Nathan. It has also signed distribution deals with big brewers such as Anheuser-Busch.

But Kirin remains in a fierce battle for market share with Japan's other leading brewer, Asahi Breweries.

Hit by increased competition, Kirin in August reported a first half profit of 14.23 billion yen, an almost 20 percent fall from the previous year.

It also slashed its full-year forecast from 35 billion yen to 28 billion yen.

Kirin expanded into pharmaceutical research and development almost two decades ago as part of an overall diversification strategy.

In 1984, it inked a joint venture with the U.S. biotech giant Amgen to create its first pharmaceutical product, a recombinant DNA-based glycoprotein that stimulates production of red blood cells.

"They've seen limits to their spirits business and had to start diversifying," said Tokyo-based analyst Tim Clark of Ion Global.

"The price of beer will be driven down by increased competition, but their core competency is in brewing and chemistry -- that is why they are going into the biotech area."

Over the next three years, Kirin plans to invest $166 million (20 billion yen) on drug research and development, the Nihon Keizai Shimbun reported earlier this year.

Kirin is shooting to quadruple its drug business, to around $1 billion a year (120 billion yen).

The company reached sales of $390 million (47 billion yen) from its drugs business in fiscal 2000 largely from its main product Espo, a treatment for kidney anemia.

Kirin is part of the Mitsubishi group, or "keiretsu", in Japan. In addition to its drug business, it is also active in floriculture.