Japan's Health Ministry, eager to trim swelling health-care costs, proposed changes to prescription forms on Friday in a bid to boost the use of cheaper generic drugs, sending shares in the nation's generic drug makers soaring.

The move reflects a global trend by governments and insurers to maximise the use of generic medicines, which are becoming increasingly available for a range of drugs as patents expire or are overturned in legal cases.

Shares in Sawai Pharmaceutical Co Ltd, Japan's biggest generic drug maker, jumped 13 percent and second-ranked Towa Pharmaceutical Co Ltd rose 8 percent, while shares of branded drug makers declined.

A proposal that generic drugs become the default option over branded drugs was made to a body that is charged with discussing changes to the health insurance system, an official with the Health Insurance Bureau of the ministry's Medical Economics Division said.

We have made the proposal ... but it is of course unclear whether the proposal will be adopted, he said.

But a generic drug-industry source said the ministry proposal meant the change was as good as decided.

That's why shares in the generic drug makers rocketed so high. If it wasn't a done deal, they wouldn't have, he said.

Japan, the world's second-biggest drug market, has a very low rate of generic drug use compared with the United States and Europe, and it is seeking to raise the proportion of generic drugs prescribed to 30 percent in 2012 from around 17 percent now.

In value terms, generics still only account for 5 percent of drugs prescribed.

By contrast, they account for 63 percent of drugs prescribed and 13 percent in value terms in the United States while in Britain, the rate is 59 percent of prescriptions and 26 percent in value terms.

The proposed change comes despite resistance from makers of branded drugs and a lack of acceptance of generic drugs among Japanese doctors.

Japanese prescription forms currently have a box that can be ticked by a doctor if a generic drug can be substituted.

The proposal would call for the box to be ticked only if the doctor did not think a generic drug could be substituted.

Sawai, the second-biggest percentage gainer on the main board, closed at 3,740 yen and Towa ended up at 4,690 yen. Nippon Chemiphar Co Ltd rose 7 percent to 480.

Investors noted the gains were just as much a reflection of hopes that the Japanese generic drug makers would become M&A targets as they were of hopes for earnings growth.

Japanese generic makers are still very small in size, with Sawai only having some 34 billion yen ($300 million) in sales.

Takeda Pharmaceutical Co Ltd, Japan's biggest drug maker, ended down 3.1 percent at 6,840 yen while Astellas Pharma Inc dropped 3.7 percent to 4,890 yen. (Additional reporting by Ben Hirschler; Editing by Hugh Lawson)

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