Abstract
Japan' s pharmaceutical markets are increasingly more competitive, and a steady restructuring of the Japanese pharmaceutical industry is under way. The government continues to tighten its control over drug expenditures, and foreign and multinational pharmaceutical companies are strengthening their foothold in Japan by launching a wide variety of new drugs. To successfully navigate the changing waters of the world' s second-largest pharmaceutical market, companies must understand today' s evolving business environment and institute a plan of action to realize their mid- to long-term visions.
Get the Answers You Need to Shape Your Strategy
- The Japanese government intended to implement annual price revisions in fi scal year 2007, but the measure has been temporarily shelved, because many thorny issues regarding Japanese practices of dispensing drugs need to be resolved before annual price revisions can be instituted. Nevertheless, why should the pharmaceutical industry in Japan anticipate that the government may implement annual price revisions in a high-handed manner in fi scal year 2009?
- The advent of "triangular mergers," whereby foreign companies are allowed to use their stock to acquire or merge with Japanese companies, arrived in May 2007. Why is this new M&A tool particularly likely to accelerate the restructuring of Japan' s marketplace? Why might Takeda represent an especially attractive takeover target?
- The Japanese market continues to be subject to less aggressive generic erosion than the pharmaceutical markets in the United States and in some European countries. But in May 2007, the government called for an increase in the market share of generics from 16.8% (by volume) in 2004 to at least 30% in 2012. In spite of the government' s goal, why may some branded drugs remain impervious to generics competition?
- Japanese pharma' s growing interest in biologics is refl ected not only in several recent deals for biologics but also in an expanding pipeline of late-stage recombinant proteins and monoclonal antibodies (MAbs). Which Japanese companies historically having little interest in biologics now have one or more biologics in late-stage development? Which companies have entered into deals in 2007 to acquire MAbs and MAb technology?
- The Japanese government aggressively cut prices for long-listed drugs in 2006, after indicating that a similar cut in 2004 was meant to be a one-time event. Which type of company has the additional price cut proven particularly hurtful to?
Scope
- The Japanese pharma landscape: market size and demographics; growth rate of health care expenditures; overall health care expenditures relative to gross domestic product; total market value of Japan' s largest domestic pharmaceutical companies; best-selling drugs in Japan.
- The government' s role in containing drug expenditure costs: cost-containment measures by the Ministry of Health, Labor, and Welfare; Japan' s National Health Insurance system; biennial drug price revisions; increased emphasis on promoting generic drugs; the DPC "fl at sum" reimbursement system; proposals to revise drug prices annually; price cuts for long-listed drugs.
- Japanese biologics: dominant players in the Japanese biologics markets; late-stage biologics in Japanese company pipelines.
- Generics: the growing acceptance of generics within the Japanese marketplace; the government' s increased emphasis on generics; reimbursement system for hospitals; new entrants in the Japanese generics market; overall outlook for the Japanese generics market.
- The growing impact of foreign companies: the strengthening foothold of multinational companies; increased competition for domestic pharmaceutical companies; efforts to accelerate the launch of global drugs in Japan.
- Recent mergers and acquisitions: Chugai and Roche Nippon; Daiichi and Sankyo; Dainippon and Sumitomo; Tanabe and Mitsubishi; Yamanouchi and Fujisawa; revisions in corporate law to provide for "triangular" mergers.
- Navigating Japan pharma' s stormy waters: outlook for growth in the Japanese pharmaceutical market; the probability that M&A activity will continue for Japanese companies; ongoing attempts to improve the reliability of generics; the ongoing fi ght for market share; the need for companies to devise a plan of action.
Table of Contents
- Executive Summary
- Strategic Considerations
- Stakeholder Implications
- Japan' s Changing Pharma Environment
- The Japanese Pharma Landscape
- Market Size and Demographics
- Health Care Expenditures Versus Gross Domestic Product
- Financial Standing of Japanese Domestic Pharma Companies
- Best-Selling Drugs in Japan
- Measures to Contain Drug Expenditure Costs
- Biennial Drug Price Revision
- Price Cuts for Long-Listed Drugs
- Ongoing Discussions on the Frequency of NHI Price Revisions
- Movement in Japanese Biologics
- Japanese Pharma Companies Involved in Marketing Biologics
- Key Marketed Japanese Biologics: Comparative Price and Japanese Sales
- Japanese Company Pipelines: Late-Stage Biologics
- Growing Acceptance and Use of Generic Drugs
- The Japanese Government' s Stance on Generics
- Generics Use by Hospitals with "Flat Sum" Reimbursement Systems
- New Entrants
- Outlook for the Generics Market in Japan
- Growing Impact of Foreign Pharmaceutical Companies
- Multinational Players Strengthen Their Foothold
- Domestic Companies Face Increasing Competition
- Geographic Launch Gap for Innovative Drugs Narrows
- Recent Mergers and Acquisitions
- Chugai and Nippon Roche
- Daiichi and Sankyo
- Dainippon and Sumitomo
- Tanabe and Mitsubishi
- Yamanouchi and Fujisawa
- Finding Improved Ways to Compete Effectively
- Revision of Corporate Law
- Navigating Japan Pharma' s Stormy Waters
- Mergers and Acquisitions
- Foreign Companies Operating in Japan
- Domestic Companies
Figures and Tables
Tables:
- 1. The Changing Business Environment for Japanese Pharma, Circa 2007
- 2. Best-Selling Drugs in Japan, 2005-2006
- 3. Revision Rates for Japanese Reimbursement Prices, 1994-2006
- 4. Percentage Reductions in Average NHI Prices for Leading Pharmaceutical Companies in Japan, 2006
- 5. Percentage of Medical Institutions and Pharmacies That Have Settled Negotiations of Drug Delivery Prices with Wholesalers, July 2006
- 6. Select Japanese Pharma Companies: Biologics Sales in Proportion to Total Worldwide Sales, 2006
- 7. Key Marketed Biologics in Japan: Comparative Price and Japanese Sales, 2006
- 8. Japanese Company Pipelines: Late-Stage Biologics
- 9. Increasing Use of Generics in Diagnostic Procedure Combination Hospitals, Fiscal Years 2004-2006
- 10. Foreign Multinational Players: Select Japanese Market Strategies and Equity Transfers, 2002-2007
- 11. Sales of the Top 15 Companies in the Japanese Ethical Drug Market, Fiscal Years 2003-2006
- 12. Study Council on the Use of Unapproved Drugs: Drugs on the Agenda for Review
- 13. Mergers and Acquisitions of Key Japanese Pharmaceutical Companies, 2002-2007
Figures:
- 1. The Japanese Pharmaceutical Market, Fiscal Years 2002-2006
- 2. Growth of the Elderly Population in Japan, 1980-2006
- 3. Growth Rates: Japan' s National Health Care Expenditures Compared with Its Gross Domestic Product
- 4. Total Market Value of Listed Shares of Japanese Companies, March 2007
- 5. Ratio of Drug Costs to Total Health Care Expenditures in Japan, 1991-2003
- 6. Number of Drugs Launched in the Japanese Market by Major Companies, 2002-2006
- 7. Japanese Company Sales: Domestic and Overseas, 2006
