Japan Pharmaceuticals and Healthcare Report Q2 2010

BMI forecasts that the value of Japanese pharmaceutical market at retail prices will increase at a very modest compound annual growth rate (CAGR) of 1.25%, as measured in local currency. However, when calculated in US dollars, growth will fall into negative territory. The market will reach a value of JPY9,619bn (US$87.45bn) in 2014, up from of JPY9,040.1bn (US$95.16bn) in 2009. Over our longer, ten-year forecast, we expect the growth rate to drop to under 1% as public purse-strings are tightened further.
Japan is looking to triple its generics sector by 2012. In 2009, generic drugs represented an estimated 9.4% of the total market by value, with BMI forecasting this share to increase to 15.5% in 2014, and further to 23.5% by the end of 2019.
Despite the low annual growth rate expected in the coming years, the Japanese drug sector continues to benefit from a large relative (per-capita consumption was estimated at almost US$750 in 2009) as well as absolute – with its population numbering over 127mn – usage of medicines, Indeed, in our updated Q210 Business Environment Ratings (BERs) table for the 15 key markets in the Asia Pacific region, Japan regained its pole position, previously held by Australia. Globally, Japan is ranked as the fourth most attractive market for multinational drugmakers, after the US, Germany and Canada.
Opportunities in the generics sector are to be increasingly explored by foreign companies, with Israeli generics specialist Teva and traditionally research-based Pfizer recently reporting their plans for entry into the market. In terms of other notable company news over the past quarter, Teva-Kowa Pharma, a 50:50 joint venture (JV) between Teva and Japanese drugmaker Kowa, entered into an agreement to acquire a majority stake in Taisho Pharmaceutical Industries. The acquisition will help Teva-Kowa to achieve its growth plan in Japan by bringing in local expertise and know-how. Earlier in the year, Teva- Kowa announced its plans to start selling generic cancer drugs from January 2010. Leading Japanese drugmaker Takeda revealed that it would enter the South American drug market via the acquisition of a generic drugmaker in the region, though the company is yet to elaborate on any potential targets. Over the coming five years, pharmaceutical imports will grow at a faster rate than exports – benefiting from regulatory and pricing environment improvements – and result in an expanding trade deficit through to 2014, with generic medicines making a major impact in volume terms. The competitive nature of the multinational sector’s hi-tech imports will add to pressures on the pharmaceutical trade balance, especially as the level of domestic research and development (R&D) industry activity lags behind that in other major markets.