Based primarily on demand for its top-selling Alzheimer's drug, Aricept, Japanese pharmaceutical Eisai (OTC BB: ESALY) has recorded an 8% increase in profits that is setting it apart from that country's counterparts. Earlier this year, the Japanese government mandated drug price cuts that have dipped into earnings, but since most of Eisai's Aricept profits are derived from sales in the U.S. -- sales here rose 38% -- it has been less affected by the decree.

While management believes that Aricept has not yet peaked for the company because of growing demand for Alzheimer's treatments (and probably won't for the next few years), enthusiasm needs to be tempered a little because of the decision by the United Kingdom's National Institute for Health and Clinical Excellence that it will no longer pay for Aricept or similar drugs. Even so, the decision would affect less than 10% of Eisai's revenues, since all of Europe accounts for just 14% of total sales.

More encouraging was the FDA's decision to expand use of Aricept to moderate to severe stages of the illness. It had previously been prescribed for only mild to moderate symptoms, but now becomes the only Alzheimer's drug that can be prescribed for the full spectrum of the illness. It will now compete directly against Namenda, the Alzheimer's treatment made by Forest Labs (NYSE:FRX) for advanced stages of the illness. Aricept was already often prescribed in combination with Namenda for those patients, but now may be prescribed on its own.

Eisai has declined to speculate on how much market share it will take as a result, but surely the other pharmas that market Alzheimer's drugs, like Novartis (NYSE:NVS) and Johnson & Johnson (NYSE:JNJ), are wistful at Eisai's prospects.

Yet it also can't be denied that Eisai needs another blockbuster drug like Aricept, which it co-markets with Pfizer (NYSE:PFE), since its patents begin to expire in 2010 and are already under attack from generic drug firms like Teva Pharmaceuticals (NASDAQ:TEVA). Eisai's heartburn drug, Aciphex, is also being challenged by the generics, though the pharmaceutical did win a summary judgment last month and will be proceeding to trial to defend the patents. Teva and Dr. Reddy's Labs (NYSE:RDY) have tried to move in on the turf before the patents expire, though Eisai has been successful in thwarting their efforts.

It is also making a move into oncology, buying a portfolio of drugs from Ligand Pharmaceutical (NASDAQ:LGND) even as it suspended trials of a stomach cancer drug in Japan. Treatments for Parkinson's and other ailments remain a priority for the Japanese pharmaceutical.

Right now, though, Alzheimer's and Aricept are where Eisai's money is being made, and it appears likely that it will continue to grow in this area for the foreseeable future.

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Fool contributor Rich Duprey owns shares of Eisai, but does not own any of the other stocks mentioned in this article. You can see his holdings here . Johnson & Johnson is an Income Investor pick. Pfizer is an Inside Value selection. The Motley Fool has adisclosure policy.