Japan: Health and medical to Japan

Trends and opportunities

The market

North East Asia is one of the fastest growing regions for Australian companies in pursuing business opportunities in the bio/pharmaceutical industry.

Key characteristics of the Japanese market:

• Japan’s population of 127.6 million has universal access to national health insurance. 
• Japan is the second largest pharmaceutical market in the world after the US and has the largest share of the Asia Pacific market. The ethical pharmaceuticals market in 2008 was valued at US$94.5 billion. 
• Japan’s ageing society and increase in chronic diseases is driving growth in the market, which is known for its high levels of patented drugs and prescriptions per patient.
• The broader biotechnology market in 2009* was estimated to be US27, a 4.1 per cent decrease from 2008 due to reduced imports of GM crops (*includes medical/pharmaceutical products, food and agriculture, research equipment, IT technologies and other related products).
• The biopharmaceuticals market in 2008 was valued at US$7.43 billion Japan had 577 bio-venture companies in 2007.

Market trends:

• Twenty-nine per cent of the new drugs approved in Japan between December 2008 and October 2009 were biopharmaceuticals – an eight per cent increase from the previous year.
• Therapeutic antibodies account for this increase, and this market was predicted to grow to US$2.1 billion in 2009 from US$1.4 billion in 2008. Large Japanese pharmaceutical companies have launched therapeutic antibody R&D activities, and are increasingly seeking opportunities to form strategic partnerships and licensing arrangements with foreign biotech companies and research institutes.
• Japan’s ‘vaccine lag’ problem is steadily improving, and three new vaccines were approved in 2009.   
• Japanese pharmaceuticals are pursuing M&A activities to rationalise their businesses and enhance productivity.
• Personalised medicine is taking hold, and various diagnostic reagents and services were launched in 2009.   
• Gene therapy clinical trials commenced in 2009.
• Regenerative medicine is becoming more advanced: products are entering the marrket and iPS cell applications used in new drug discovery. 
• The generic, bio-similar drug market is growing due to impending patent expiries and the escalating burden of Japan’s healthcare budget (8.1 per cent of GDP in 2008). The government approved the first bio-similar product in 2009, and has made legislation changes to boost the generic drug market to 30 per cent by 2012 (a market size of one trillion yen).
• A new drug pricing system is rewarding on-patent, innovative drugs; the PMDA has improved drug review processes; and the Ministry of Health, Labor, and Welfare has implemented guidelines for follow-on biologics.

Opportunities

Australian companies are well positioned to enter licensing and joint research collaborations with Japan, which has traditionally looked to the US and Europe for partnerships. The best opportunities are in:

• Innovation in such fields as oncology, diabetes, hyperlipidemia, hypertension, artherosclerosis and CNS.
• Human therapeutics: new drug discovery and drug delivery systems, personalised medicine, tissue engineering, diagnostics, and bio similar.
• Clinical trial services
• Nutraceutical, functional food and bioactive ingredients.
• Industrial biotechnologies and nanotechnologies.
• Medical devices

There is also an increasing demand for aged-care products and rehabilitation equipment due to the rapidly ageing population in Japan.