BRIEFING NOTE – Keeping abreast of changing dynamics in the Japanese Pharma market

Recent initiatives are changing the dynamics in the Japanese pharmaceutical market.  At one end of the spectrum, a trial process is rewarding innovation by exempting new drugs from biennial price cuts in return for investing in areas of unmet need, whilst other measures are speeding up drug approvals.  At the other end, the need to contain costs is seeing a greater push towards increased generic penetration and an increase in the price differential between brands and generics. These ongoing changes are being closely monitored and analysed.  Here at groupH we are ensuring that all the assumptions we use for the Japanese Pharma market – for example in our forecasting models – reflect these changing dynamics.

Disappearing ‘Drug-lag’

Historically, Japan’s lengthy and complex review system has seen drug approvals lag behind other mature markets.  To speed up the process, and provide better access to new medicines, the Pharmaceutical and Medical Devices Agency (PMDA) is now taking appropriate measures; such as recruiting additional personnel and streamlining procedures to improve efficiency.  There is also a greater acceptance of non-Japanese trial data and an increase in priority reviews for products in disease areas with high unmet need.  More consultations with applicants prior to submission are also creating efficiencies.

Price Cuts Waived

Concurrently, a pricing system is being piloted to reward companies investing in the development of new drugs and indications in areas of unmet need.

Instead of the traditional system of biennial price cuts on new medicines – which critics claim stifles innovation – products from these companies will see their prices upheld until the end of their patent life (although they will see a far sharper drop in price at this point).

Increased Generics Penetration

A drive towards increased generics penetration has been seen over the last few years.  Processes to encourage both generic prescribing and substitution have been put in place, as well as measures to raise patient acceptance levels.  By last year, it was hoped that a 30% market share by volume could be achieved.  Although this target has not been met, penetration has risen and achieving this figure in the near future is feasible.  A new target of 60% has now been set for the end of financial year 2018. Reducing the price of generics is also an ongoing process, with new rules implemented in 2012 to lower the generic price cap from 70% to 60%.

New Forecasting Assumptions

So, if like us, you need to generate drug forecasts in Japan;

  • there is no longer a need to assume that Japanese launch dates will lag behind the US and Europe
  • prices of new drugs may remain steady instead of declining every two years
  • generic capture rates and price differentials must be updated

Want to Dig Deeper?

Japan’s Drug Lag and National Agenda. E. Tsukamoto and S. Tripathi. Regulatory Focus. P35-41. January 2011.

Current Topics of Pharmaceutical Regulatory Affairs in Japan. T. Sato. The 3rd China-Japan Symposium on Drug Development. March 2012.

Japan Sets Target of 60% Generics by FY 2018. International Federation of Pharmaceutical Wholesalers. April 2013.