UPDATE 2-Astellas cuts outlook as generic competition heats up

* Cuts recurring profit f'cast to Y200.5 bln, below consensus

* Hit by yen, competition from generic version of Prograf

* Q2 recurring profit at Y58.69 bln, down 21 percent

* Competition from generic rival tougher than expected

* Sees generic rival taking 40 pct of Prograf's sales in 2H

TOKYO, Nov 5 (Reuters) - Astellas Pharma (4503.T), Japan's No.2 drugmaker, cut its outlook further below market expectations as tough competition from generic drugmakers, the yen's strength and R&D costs took their toll.

Astellas, which like other global drugmakers is scrambling to develop next-generation drugs as patents on mainstay drugs expire, also reported on Thursday a 21 percent fall in quarterly recurring profit.

It was Astellas' first earnings report since Novartis AG's (NOVN.VX) unit Sandoz launched a generic rival to Astellas' best-selling drug, Prograf, which helps prevent the rejection of a kidney or liver transplant. [ID:nLB598268]

The Sandoz drug, still the sole generic version of Prograf, debuted in the United States in August, well after Prograf's patent expiration in April 2008.