Oct. 6 (Bloomberg) -- Sandoz AG, Novartis AG’s generic- drugs unit, will sell six more medicines in Japan this year and may acquire companies as part of plans to expand in markets with growth potential for cheaper copies of brand-name treatments.

The additions will bring to 13 the number of drugs Sandoz is introducing in Japan this year, Chief Executive Officer Jeff George said at a group interview in Tokyo yesterday, without identifying the treatments. The company plans to sell at least 10 new drugs a year in Japan until 2014, he said.

Sandoz seeks to bolster growth in what George calls emerging generic markets, including France, Italy and Japan, where lower use of copied drugs leaves room for growth. Generics made up 18 percent of drug sales volume in Japan in the year to March 31, while IMS Health Inc. estimates that such medicines account for about 63 percent of drugs prescribed in the U.S.

“From the emerging markets perspective, there are a number of markets where we don’t have the presence we would like to have,” George said. The company will consider building on existing operations as well as mergers and acquisitions to expand, he said, declining to be specific on targets.

Holzkirchen, Germany-based Sandoz, which has introduced 18 drugs in the U.S. this year, will begin selling “a couple” more medicines in that market to help turn around earnings, George said. Earnings in the U.S. climbed in the second quarter of this year, the first time since 2007, after falling 10 percent last year, he said.

Novartis shares rose 15 centimes, or 0.3 percent, to close at 51.35 Swiss francs yesterday. The stock has lost 2.6 percent in 2009, and is heading for its third straight annual decline.

Japanese Policies

George said there is a lack of incentives in Japan for pharmacists and doctors to encourage use of generic medicines. Analysts including Ryoichi Urushihara at Nomura Holdings Inc. in Tokyo have said Japanese government incentives for pharmacists to push the use of generics are insufficient.

The country adopted generic-drug policies in April 2008 to help it meet a goal of having copied drugs account for 30 percent of prescriptions by 2012, rising from 17 percent in 2006. Japan gives pharmacists 40 yen ($0.45) per prescription if generics account for at least 30 percent of the medicines they dispense over a three-month period. Since last year, doctors also have to specify in writing if a prescription can’t be filled by a copy.

George said the current cash incentive for pharmacists is “not a lot,” and it may be difficult for Japan to meet its target for generic-drug use.

Sandoz aims to have a leading position in biosimilars, injectable drugs, especially for oncology, and inhalable medicines, the chief executive said, without providing more details. A biosimilar is a replica of a brand-name medicine derived from living cells that has lost patent protection.

The company in June won regulatory approval in Japan to sell its human growth hormone treatment somatropin, the first biosimilar to be permitted in that country. The injection is a version of Pfizer Inc.’s Genotropin and is used to treat growth deficiency that occurs in children or is caused by certain diseases.

To contact the reporter on this story: Kanoko Matsuyama in Tokyo at kmatsuyama2@bloomberg.net

Last Updated: October 5, 2009 12:01 EDT