UPDATE 1-Sawai: to mull capital tie-up with bigger drugmaker

TOKYO, June 29 (Reuters) - Sawai Pharmaceutical (4555.T), Japan's No.1 generic drug maker, said it will need to consider a capital tie-up with a bigger drugmaker in the future as it will need a larger budget for product development.

"Our sales are strong now, but when it comes to several years from now, we will have to think about that," Hiroyuki Sawai, Sawai Pharmaceutical's chairman, told a news conference on Tuesday.

Sawai is faced with intensifying competition, especially from new foreign entrants to Japan's generic drug market.

U.S. firm Pfizer Inc (PFE.N), the world's biggest drugmaker, plans to enter Japan's generic market, while France's Sanofi Aventis (SASY.PA) is teaming up with Japan's Nichi-iko Pharmaceutical 4541.OS in the Japanese generic drug business.

Israel's Teva Pharmaceutical (TEVA.TA), the world's No.1 generic drug maker, began marketing in Japan earlier this year through a joint venture, targeting a 10 percent share of the Japanese generic drug market, which it expects to grow to 1 trillion yen ($11 billion) by 2015. (Reporting by Yumiko Nishitani)