Is the Pharmaceutical industry in Japan looking optimistic in 2019?
2018 has been a year of growth for Japan’s pharmaceutical industry with great innovation and big mergers and acquisitions. Sustaining this positive outlook, the Japanese pharmaceutical market is forecast to reach a new high – USD72billion by 2021 – according to a report by GlobalData.
While research has lauded the usual factors for growth to the likes of increasing demand from its massive elderly population and new regulatory guidelines of the country, below are some other notable improvements that the country has experienced.
- Faster drug discovery with Artificial Intelligence (AI)
The average time for the breakthrough of a new drug can take between 12 to 15 years, at a cost of up to USD1.6 billion. Currently, Japan's Ministry of Education, Culture, Sports, Science and Technology seeks USD22.9 million in its fiscal budget request for AI programs to reduce the timeframe for drug discovery.
With an allocated budget for AI, drug companies can now independently and swiftly discover drug candidates, a process that usually takes 2 to 3 years, but could now be shortened significantly by eliminating advanced compounds that may cause adverse side effects.
- Surge in drug approvals
The Ministry of Health, Labour and Welfare (MHLW) in Japan has taken a more active role as a regulator. Recently, it has stepped up its pace in approvals of drugs, which is good news for biotech and pharma companies, signalling a generally welcoming regulator. Some of the recent note-worthy drug approvals include:
- Astellas Pharma’s Xospata (gilteritinib) – received manufacturing and marketing approval for the treatment of FLT3 mutation-positive relapsed or refractory acute myeloid leukaemia (AML) in Japan.
- Bayer’s Jivi (BAY94-9027) – for the prophylactic treatment of haemophilia A for adults and adolescents 12 years of age or older in Japan.
- Shire’s Firazyr (icatibant injection) – granted manufacturing and marketing authorisation for the acute treatment of hereditary angioedema (HAE) attacks in adult patients with HAE.
- Takeda Pharmaceutical’s Adcetris (brentuximab vedotin) – obtained an additional dosage and administration for the use of Adcetris in combination with doxorubicin, vinblastine and dacarbazine as a frontline treatment option for CD30-positive Hodgkin lymphoma patients in Japan.
The government also plans to issue new regulatory guidelines to expedite the approval process of products and increase access to novel therapeutics. Some of the guidelines include the use of data from Phase III clinical trials that have been carried out in regions other than Japan. The guidelines are not only expected to attract foreign companies, but also drive growth in the market.
- Mergers and Acquisition (M&A)
Biggest M&A of 2018: Takeda and Shire
Shire agreed to be acquired by Japan-based Takeda Pharmaceutical, under the terms that Takeda will purchase Shire for about USD62.2 billion, or about USD66.22 per share.
The combined companies would have its headquarters in Japan. Takeda shareholders would own about 50% of the merged companies, which would have a combined workforce of about 52,000 people worldwide. While job cuts will be experienced globally from 6% to 7% or in the low to mid-3,000s, this might however lead to an increase of roles in Japan at senior levels with the consolidation of Takeda and Shire’s operations into its own facility in Boston, Switzerland and Singapore.
The deal would strengthen Takeda’s access to the U.S. market, with a greater focus on R&D for the long-term, aiming to become more productive and have a more attractive talent pipeline.
Shire on the other hand would be gaining more exposure in Japan and other emerging markets.
What are some of the factors that may limit growth?
- Openness to change
Big pharmaceutical companies need to take into account their traditional corporate culture before making business decisions – a lot of red tapes, and less likely to be open to change. The Japan pharma market for instance, is entering a period of great change which means opportunity for those who embrace change.
- Expiry of patents
The factors that will restrain growth, however, will be the expiry of patents in high-turnover drugs, resulting in generic substitutes and annual price cuts. Patent expiry is further expected to affect the revenues of some major pharmaceutical companies in Japan.
For example, the patents for Daiichi Sankyo’s Olmesartan family of anti-hypertensive products in the US expired in 2016 and are due for expiry in the EU and Japan by 2018.
As a result, the country is hoping to increase generic drug substitution, which is also being promoted by the Japanese government to control prices and reduce the burden of healthcare expenditure. In addition, the MHLW has announced plans to review drug prices more regularly to keep them in check.
Despite the outlook for greater growth, Japan will still need to take into account the above limitations and tackle those with strategic solutions to take full advantage of the promising growth in the year ahead. If you are a professional within the life sciences industry and are keen to find out more about the movement in the market and how it can possibly impact you or your organisation, please contact us on LinkedIn or email us at [email protected]. You may also follow our LinkedIn page for other industry-related insights.