UPDATE 1-Japan's Mediceo, Alfresa scrap merger plan

(Adds more details, share prices)

TOKYO, Jan 9 (Reuters) - Japan's top two drug wholesalers Mediceo Paltac Holdings (7459.T) and Alfresa Holdings (2784.T) scrapped merger plans after the nation's fair trade watchdog asked them to review the plans.

Mediceo, the nation's largest drug wholesaler and No.2 Alfresa said in a statement that implementing the merger on a delayed schedule would have carried too many risks.

Last October, the firms said Mediceo would take over Alfresa in a $2 billion stock deal to better cope with falling prices and competition.

The merger would have created a dominant drug wholesaler in Japan with annual sales topping 4 trillion yen ($44 billion), more than double that of their biggest competitor Suzuken Co (9987.T)

Japan's pharmaceutical distributors have been hit by government-mandated price cuts for drugs and promotion of generic drugs.

Drugmakers Takeda Pharmaceutical (4502.T) and Astellas Pharma Inc (4503.T) are major shareholders in Mediceo.

Alfresa, whose shares had been scheduled to be delisted from exchanges because of the merger, will now keep it shares listed on the Tokyo and Osaka bourses.

Mediceo shares rose 4.1 percent to 1,045 yen, while Alfresa plunged 11.9 percent to 3,560 yen. The Nikkei 225 Stock Average .N225 rose 0.2 percent. ($1=91.10 Yen) (Reporting by Yumiko Nishitani; Editing by Edwina Gibbs)