Japan is the second largest market in the world in terms of both
total pharmaceutical R&D expenditure and annual drug sales.
Whereas R&D expenditure continues to grow steadily, the number
of companies is decreasing, due to foreign competition and the government
plan to encourage efficiency to contain the spiralling health care
costs in this aging society. Companies without high-margin products
that persist in trying to remain all-round manufacturers of their
own drugs are unlikely to survive.
Whereas until the mid 1990s local differences from international
norms were maintained to protect the domestic pharmaceutical industry,
the overriding goal is now to reform the healthcare system to provide
safe and effective treatments at reasonable cost. Globalisation
is recognised as a key means to achieve this, as shown by the formal
subscription of Japan to the 4th International Conference on Harmonisation
(ICH) in April 1998. Put simply, this has meant that it is now possible
for western data to be used for registration of drugs in Japan.
The implementation of Good Clinical Practice (known as New GCP in
Japan) at the same time has made it correspondingly difficult to
undertake clinical trials domestically, so the two measures together
have led to a much greater use of western CROs for clinical studies
outside Japan. Many companies have gone a step further, undertaking
trials in the US or Europe, gaining approval in this regions and
then launching the products there, rather than first in Japan. The
data from the foreign trials is then used for the regulatory submission
The regulatory environment here remains rather slow and indecisive,
particularly with regards to products based on revolutionary science
such as tissue engineering and gene therapy. However, the new Pharmaceutical
Affairs Law introduced in July 2003 is leading to a number of promising
changes. A new regulatory body modelled on the FDA is being established
and fast-track priority reviews are being introduced. Moreover,
product-specific marketing authorisations will replace manufacturer/importer
based approval during 2005, making it easier for foreign companies
to market products manufactured overseas. Regulatory costs are expected
to be higher, but products should be approved much faster than before.
Japanese pharmaceutical companies continue to be assailed by a
number of pressures, which are having the cumulative effect of forcing
them to restructure and, for the larger ones at least, to develop
new markets and research bases outside Japan.
Realignment in the industry in recent years has included the following:
||Yoshitomi acquires Green Cross Pharmaceuticals
||Mitsubishi Pharma acquires Welfide (new name of Yoshitomi)
||Daiichi Pharmaceuticals acquires pharma operations of Suntory,
becomes Daiichi-Suntory Pharma
||Chugai becomes subsidiary of Roche
|| Yamanouchi and Fujisawa plan to merge to create a new company, Astellas.
||Three planned mergers. Namely between, Sankyo and Daiichi Pharma; Dai Nippon Pharma and Sumitomo Pharma; and Grelan Pharma and Teikoku Hormone Manufacturing, respectively.
There are a number of reasons why Japanese pharmaceutical companies
are particularly keen to partner with US and European biotechnology
ventures and outsourcing companies. Domestic opportunities to access
new technologies are severely limited as there are very few indigenous
bio-venture companies. Also, there are cultural and structural obstacles
to the successful development of strategic research alliances with
Analysts believe it is likely that Japanese pharmaceutical companies
will increasingly become divided into two camps those involved
in production, and those involved only in development. The logic
being that this will allow larger pharmaceutical companies to focus
their resources on strengthening development capability to survive
global competition, at the same time as allowing smaller companies
without deep pockets for new drug development would be able to leverage
their manufacturing know-how.
A new pharmaceutical law to be introduced in 2005 will allow companies
to completely contract out all production to CMOs. Currently they
are limited to outsourcing only part of their production. This has
already led to a decision by many companies to cut their in-house
||closed its plant in Fujisawa, Kanagawa Prefecture, in fiscal
2005, and is expected to farm out part of its production to
smaller drug makers.
||will close its plant in Omiya, Saitama Prefecture, by the
end of fiscal 2006, and will commission output of liquid used
in intravenous drip infusions to an outside firm.
||closed a plant in Fukuyama, Hiroshima Prefecture, in December
2003, and has sold its plant in Takaoka, Toyama Prefecture,
to Fuji Pharmaceutical.
|Sankyo and Yamanouchi
||are also known to be considering increasing the amount of
their production which is contracted out to other companies.
On the other hand, a number of companies are increasing their facilities
with a view to capitalising on the expected increased market for
||¥300 million yen on new facilities for cancer drugs in
||¥11 billion yen to build a plant to produce intravenous
drugs, and plans to spin off its production operations into
a separate firm in April 2005.
||invested ¥13 billion yen during 2003 to increase capacity
for contract manufacture. Over the longer term it plans to invest
a total of ¥100 billion in building additional capacity.
||invested ¥6 billion yen in fiscal 2003 to build a facility
to make antibiotics for outside firms.
||spun off four of its drug plants into separate firms in October