Industrial Report (C) JETRO Japan Economic Monthly, August 2005
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Industrial Report (C) JETRO Japan Economic Monthly, August 2005 Trends in the Pharmaceutical Industry Japanese Economy Division Summary The nature of Japan’s pharmaceutical market is changing. The market for generic drugs in Japan has been expanding in recent years. Major Japanese pharmaceutical companies have undertaken mergers and restructuring, and an increasing number of foreign pharmaceutical companies have entered the Japanese market recently by establishing joint ventures with Japanese drug companies or granting distribution rights for their products to Japanese firms. 1. Market Overview The Japanese pharmaceutical industry, buoyed by a rise in income levels and growing awareness about hygiene after World War II, has grown gradually in line with Japanese industry. The introduction of universal health insurance coverage in April 1961 triggered a soaring increase in domestic demand for medicines. The brisk development of new medicines based on technologies introduced from the West has enabled the industry to respond more quickly to market needs. As a result, the Japanese pharmaceutical industry is now second only to that of the United States. In recent years, however, Fig. 1-1 Japanese Market Share of Generic Drugs (GE/total drugs) the financial situation (%) Value Quantity basis surrounding health insurance has (Drug price basis) become strained due to increasing 1999 4.7 10.8 medical costs shouldered by the 20024.8 12.2 2003 5.2 16.4 government, owing to the aging Source: Japan Generic Pharmaceutical Manufacturers Association population, advances in medical Fig. 1-2 Market Shares of Generic Drugs in Main Countries technology and the development (2002) of new medical equipment. The (%) U.S. Germany U.K. France Japan Ministry of Health, Labour and Quantity 52 50 52 12 12 Welfare has responded with Value 9 29 17 3 5 measures designed to help curb Note: Figures for the U.S. and France are for 2001. Source: Japan Generic Pharmaceutical Manufacturers Association the cost of medicine, shouldered by patients, medical institutions and insurers, which has stimulated the market for generic drugs. In fiscal 2003 (ended March 31, 2004), the sales share of generic drugs in the pharmaceutical market increased 5.2%, or 0.4 percentage points, in terms of value and 16.4%, or 4.2 percentage points, in terms of sales volume. This upward trend continues. Reorganization of the pharmaceutical industry is proceeding apace, particularly in the drug wholesale trade. In addition, mergers and restructuring of major domestic pharmaceutical Industrial Report (C) JETRO Japan Economic Monthly, August 2005 manufacturers, which were almost nonexistent in the past, have become commonplace in recent years. One new business model is for pharmaceutical firms to outsource business to bio-venture companies, a move that is attracting much attention. 2.Change in Market Scale a. Changes in drug production Drug production in 2003 totaled ¥6,533.1 billion, a fractional gain of 0.7% over the preceding year, but still an all-time high. Following a trend that has emerged in recent years, the growth rate was alternately positive and negative on the back of changes to the health insurance drug price schedule, which is Fig. 2 Changes in Pharmaceutical Production revised every two 70,000 (billion Home medicines sold door-to-door yen) OTC drugs years. The year 2003 60,000 Other drugs Ethical drugs was a year of positive 50,000 growth, but the growth rate was the smallest in 40,000 recent years due to 30,000 curbs placed on the 20,000 nation’s medical bills owing to strained 10,000 health insurance 0 1970 1975 1980 1985 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 finances, among other Note: Imports are mainly drugs produced from bulk powder, liquid concentrate, bulk products and raw materials for drug formulations. Source: Japan Pharmaceutical Manufacturers Association (JPMA) reasons. b. Change in production, by drug category Production of prescription drugs rose 1.5% to ¥5,813.7 billion, while production of other drugs came to ¥719.4 billion, a decrease of 5.3%. Ordinary over-the-counter medicines totaled ¥671.8 billion, down 5.1%, and medicines sold door to door ¥47.6 billion, a drop of 8.0%. This was the sixth consecutive year of decline for sales of the three categories apart from prescription drugs, resulting in prescription drugs holding an 89.0% share of the market. c. Change in production, by usage Among prescription drugs, the production of cardiovascular medicines and gastroenterological drugs trended upward because of increased fatalities stemming from adult diseases. A phenomenal proliferation of cardiovascular medicines was spurred by increased lifestyle-related diseases and chronic hypertension. In 1989, cardiovascular medicine production Industrial Report (C) JETRO Japan Economic Monthly, August 2005 caught up with antibiotics, which had long retained the top position. Cardiovascular medicine totaled ¥1,226.1 billion in 2002, a decrease of 0.7% and the first decrease in four years, but rebounded to ¥1,299.8 billion in 2003, up 6.0%, the biggest growth rate among the top 10 drugs. The growth of cardiovascular medicines was supported by antihypertensive drugs, vasodilators and lipid-lowering agents. Production of antihypertensive drugs in fiscal 2003 totaled ¥439.7 billion, an increase Fig. 3 Breakdown of Domestic Drug Production ( ) of 8.5%, retaining the top In billions of yen and % Central Other Antibiotic Blood and Allergy Cardiovascu- Gastrointesti- nervous Biological Dermatolo- FY metabolic prepara- body fluid medication Chemotherpeutics position in terms of drugs lar drugs nal drugs system drugs gic drugs drugs tions drugs s drugs classified by effect. Behind 1980 a 361.7 254.7 183.6 271.8 814.3 82.5 33.8 114.4 121.9 29.5 b 12.1 8.6 6.2 9.1 27.3 2.8 1.1 3.8 4.1 1.0 the strong growth, the rapid c (2) (4) (6) (3) (1) (11) (15) (8) (7) (17) 1985 a 506.2 185.1 272.2 289.4 690.5 120.9 19.0 153.4 156.9 59.0 expansion of the b 15.0 5.5 8.0 8.6 20.4 3.6 0.6 4.5 4.6 c (2) (5) (4) (3) (1) (10) (20) (8) (7) (16) 1988 a 383.8 225.5 365.5 406.9 702.5 151.2 25.8 162.0 214.7 103.3 Angiotensin II receptor b 15.9 5.2 8.5 9.4 16.3 3.5 0.6 3.8 5.0 2.4 c (2) (5) (4) (3) (1) (11) (20) (10) (6) (14) inhibitor should be noted. 1989 a 757.9 256.7 421.2 442.1 724.5 175.9 24.3 159.8 227.1 118.9 b 16.2 5.5 9.0 9.5 15.5 3.8 0.5 3.4 4.9 2.5 c (1) (5) (4) (3) (2) (9) (21) (10) (6) (13) Other cardiovascular 1990 a 814.8 274.7 424.0 429.4 624.1 177.9 24.4 171.7 228.1 162.1 b 17.3 5.8 9.0 9.1 13.2 3.8 0.5 3.6 4.8 3.4 medicines that attained c (1) (5) (4) (3) (2) (9) (22) (10) (7) (13) 1995 a 10,045.7 415.0 457.4 442.5 451.5 263.0 183.1 233.2 218.2 179.7 steady growth included b 19.1 7.9 8.7 8.4 8.6 5.0 3.5 4.4 4.2 3.4 c (1) (5) (2) (4) (3) (6) (9) (7) (8) (10) 2000 a 1,113.5 435.5 445.3 389.4 373.9 343.0 185.3 250.7 240.0 159.0 Blopress from Takeda b 20.7 8.1 8.3 7.2 7.0 6.4 3.4 4.7 4.5 3.0 c (1) (3) (2) (4) (5) (6) (9) (7) (8) (11) Pharmaceutical, Nu-Lotan 2001 a 1,234.8 484.3 477.5 428.0 410.4 301.3 247.8 255.4 236.6 167.4 b 21.6 8.5 8.3 7.5 7.2 5.3 4.3 4.5 4.1 2.9 c (1) (2) (3) (4) (5) (6) (8) (7) (9) (10) by Banyu Pharmaceutical, 2002 a 1,226.1 519.9 477.1 459.5 369.8 295.7 218.5 254.7 230.8 186.6 b 21.4 9.1 8.3 8.0 6.5 5.2 3.8 4.4 4.0 3.3 and Diovan from Novartis c (1) (2) (3) (4) (5) (6) (9) (7) (8) (10) 2003 a 1,299.8 528.8 488.4 474.6 386.9 312.0 245.1 237.2 223.0 194.1 Pharma. In addition, b 22.4 9.1 8.4 8.2 6.7 5.4 4.2 4.1 3.8 3.3 c (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) contributing to this Note 1: Classification of effect was revised in 1991. Note 2: "a" indicates value produced, "b" percentage of total, and "c" order. increase was the release of Source: Ministry of Health, Labour and Welfare Micardis by Nippon Boehringer Ingelheim in December 2002, and the release of Olmetec by Sankyo–Sanwa Kagaku Kenkyusho and Kowa–Nikken Chemicals in May 2003. Production of lipid-lowering agents in 2002 stagnated at ¥269.5 billion, down 6.4%, but bounced back vigorously in 2003 to ¥302.7 billion, up 12.3%. Sales of the HMG-CoA reductase inhibitor increased. Mevalotin of Sankyo and Lipovas of Banyu were reclassified as generic drugs in July 2003 and Lipitor of Pfizer and Astellas, a second-generation cardiovascular agent, exhibited strong growth.