An ageing population, good health standards and a fully developed market make Japan truly a Land of the Rising Sun for pharma companies. By 2020, the market could edge US $ 80 billion, recent figures indicate. Yet, the country politics affect the market perspectives in the second largest pharmaceutical market.
Japan’s pharmaceutical market value is set to grow at a tepid Compound Annual Growth Rate (CAGR) of 1.3 % from US $ 72.8 billion in 2013 to reach US $ 79.8 billion by 2020, driven by new product launches and the healthcare burden of the country’s aging population, according to research and consulting firm Global Data.
However, the company’s latest report states that the Japanese government’s promotion of generic drugs, its biennial pricing review system and the depreciation of the yen against the dollar will be limiting factors in what is the second largest mature pharmaceutical market in the world by value.
Japanese Pharma Market Edging Towards 80 Billion Dollars by 2020
The market was valued at US $64.2 billion in 2008 and peaked at US $ 88 billion in 2011, before a slight dip to US $ 87.2 billion in 2012. A substantial drop in 2013 saw its value decrease by over US 14 billion, but Global Data expects a steady period of recovery to follow.
Joshua Owide, Global Data’s Director of Healthcare Industry Dynamics, says: “Deregulation measures introduced in April 2005 have had an impact on overall market performance and more efficient drug reviews have facilitated the entry of new products. The approval process has now caught up with that outside of Japan, as highlighted by two approvals for Bristol-Myers Squibb, the Daklinza (daclatasvir) and Sunvepra (asunaprevir) dual regimen for hepatitis C, and Opdivo (nivolumab) for melanoma, prior to their approval by the US Food and Drug Administration.”
One Man's Meat is Another Man's Poison: The Rise of Generics
Aside from wider economic factors, such as currency exchange rates, Global Data states that increased use of generic drugs will be a key contributor to the forthcoming period of slow growth to 2020. Owide continues: “In 2008, generics accounted for 19 % of the pharmaceutical space in terms of volume, rising to 25.2 % in 2013. Japan has set a goal for generics to account for 60 % of all drug use by 2017.
“To this end, the Ministry of Health, Labor and Welfare announced new price cuts in 2013 for drugs with generic replacement of less than 60 %, a move which is likely to limit future growth in the pharmaceutical arena.”