Japanese Pharmaceutical Industry- An Introduction.

by Dr. Shruti Bhat


Japanese Pharmaceutical Market-

The Japanese market is the second largest pharmaceutical market globally, after the US, with estimated sales of $60 billion constitutes approximately 11% of the world market. However, it is a market that frustrates the major pharmaceutical companies as it is growing at a significantly lower rate of growth than the average of the world pharmaceutical markets. This has also often affected the Japanese Pharmaceutical Companies in a negative way .

Historically this lower growth rate has been attributed to the struggling Japanese economy, but more recently the biennial NHI drug price reductions have been the determining factor of the Japanese pharmaceutical market.

The Japanese indigenous pharmaceutical companies are the prime forces in the Japanese market. These Japanese pharmaceutical companies however have been held back by their own inability to capture the western pharmaceutical market and the shortcomings in their own economy. The experts feel that in order for the Japanese pharmaceutical companies to do well in the near future the national government should be taking steps to make sure that the prices of health care products come down. In all probability the Japanese pharmaceutical companies are unlikely to witness a major turnaround before 2011. Presently the companies as well as the overall market are going through an extremely critical phase. The pharmaceutical companies have been gearing up to face the challenges posed by the ultra competitive international medicine market.

Pivotal period of change:

The Japanese pharmaceutical market is entering a pivotal period of change. Although it is unlikely to see high growth before 2011, industry experts expects significant company activity as Japanese pharmaceutical companies strive towards international competitiveness.

How is the change expected to happen in the Japanese pharmaceutical industry ?

Japan has tightened its drug approval processes. According to research firm Research and Markets, Japan is doing its level best to improve its drug approval processes and the regulatory laws.

Despite its prolonged economic troubles in recent years, Japan remains the world’s second largest pharmaceutical market, after the US. It also remains one of the less penetrable. A strong and highly advanced domestic manufacturing industry, an opaque regulatory system and extensive cultural differences have made the Japanese market a difficult and long-term prospect.

There have however been recent signs that Japan is attempting to improve the drug approval process and move more into line with Western countries regarding regulatory laws. Significant cuts in government reimbursement levels in recent years have affected the market for pharmaceuticals, already depressed by the country’s faltering economy, while recent court judgements have weakened the country’s intellectual property laws.

In April 2000, the Japanese government promised measures to streamline the regulatory process and to make that process more transparent to outsiders, a promise reaffirmed at the subsequent G8 summit. Much of this has been at the behest of the US and Japan’s leading supplier of pharmaceuticals. The newly-created PMDA agency has been introduced in 2004, in an attempt to improve drug approval times and bring them more into line with their US and European counterparts. The market is therefore increasingly open to overseas products, and many domestic companies are being forced into measures such as mergers and expansion of R&D facilities in a bid to ensure survival in the marketplace.

In the next chapter we shall touch upon how was this change in the Japanese pharma market scenario used by the pharmaceutical industry.

For inquires and clarification, please email me at drshrutibhat@gmail.com or call 1-514-743-6159.