Japan Pharmaceuticals and Healthcare Report

In the Q409 update of BMI's Japan Pharmaceuticals & Healthcare report, we have introduced our 10- year Drug Expenditure Forecast Model. This proprietary tool reveals that medicine sales in the Asian country will decline from US$85.8bn in 2008 to US$84.6bn in 2018. However, in local currency terms, the market will actually expand by a compound annual growth rate (CAGR) of 1.11% over the forecast period.

Resistance to prescribing generic drugs in the Asian country is strong. The domestic powerhouses of Takeda Pharmaceutical, Astellas Pharma and Daiichi Sankyo dominate with their vast armies of sales representatives. Doctors are loyal to entrenched brands and there is a common misconception that generic medicines are inferior to their patented equivalents.

Japan still has some way to go to meet its drug lag reduction targets. According to a representative of the Ministry of Health, Labour and Welfare (MHLW), over the next two years the organisation is looking to cut the average delay between launches in major Western markets and Japan by 2.5 years. This will benefit both patients and drugmakers. For pharmaceuticals approved in the year to March 2008, the median total review time for standard drugs was 20.1 months, more than twice as long as in the US.

In BMI's Business Environment Ratings matrix for Q409, Japan has lost top position to Australia. It is important to note that this was not due a decline in the attractiveness of Japan's market, but rather an improvement in Australia's. The maturity of the market, as well as its absolute size, high per capita expenditure and the preference for patented drugs, will continue to ensure that Japan remains among the most attractive propositions within the 15 markets surveyed in the Asia Pacific region.

During June 2009, Japan relaxed its rules on organ transplants. This will prolong the lives of affected patients and stop people going abroad for procedures. BMI believes that manufacturers of drugs for the prevention of organ rejection will see upsides from the changes. Japan adopted the Organ Transplant Law in 1997, but since then only 81 procedures have been carried out, compared with many thousands each year in the US and Europe.

BMI's Burden of Disease Database (BoDD) reveals that Japan will become an unhealthier place over the next two decades. The number of disability-adjusted life years (DALYs) lost to non-communicable diseases will increase from 10,105,166 in 2008 to 11,565,794, a rise of 14.5%. Meanwhile, the number of DALYs lost to non-communicable diseases will decrease from 438,203 to 176,625, a fall of nearly 60%.