UPDATE 3-Takeda drops development of Actos combination drug

(Updates with closing share price)

TOKYO, June 1 (Reuters) - Takeda Pharmaceutical Co. Ltd. (4502.T), Japan's biggest drug maker, has dropped development of a medicine that combined its diabetes drug Actos and a drug candidate that controls high blood pressure.

The combination product was in phase III studies in the United States.

Actos, which is used to treat type 2 diabetes, is Takeda's biggest earnings driver, and potential new combinations of the medicine could be key to expanding its franchise and extending sales after its U.S. patent runs out in 2011.

Actos is also expected to be the main beneficiary after rival drug Avandia, made by GlaxoSmithKline Plc (GSK.L), was linked to heart-attack risk in a study published last month.

Glaxo has said it strongly disagrees with the study's findings, but early prescription data has shown that U.S. doctors have shunned Avandia and Actos is aggressively taking market share.

Takeda said on Friday it had dropped its Actos/TAK-536 project after finding it needed to improve the combination drug's formulation before submitting a new drug application. It decided that the company's money and time was better spent on other projects.

Yo Mizuno, an analyst at the Daiwa Institute of Research said he thought the news would have little impact on the company's earnings outlook.

"TAK-536 is an angiotension receptor blocker but they have TAK-491 which is also one too. TAK-536 is an older type of medicine and it seems its expectations are higher for TAK-491," he said.