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Japan Pharmaceuticals and Healthcare Report Q4 2011
Business Monitor International, Aug 2011, Pages: 109
Business Monitor International's Japan Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Japan's pharmaceuticals and healthcare industry.
BMI View: Japan's pharmaceutical market is a compulsory destination for manufacturers of patented drugs and, increasingly, generic and over-the-counter (OTC) medicines. The regulatory regime has many unique features including the ‘drug lag', the ‘90% rule', a divergent biosimilar approval pathway, biennial price cuts, Iyaku Bungyo and requiring local clinical trials for approval. Japan's ageing population, state support for the provision of healthcare and a large economy are the main attractions for drugmakers.
Headline Expenditure Projections
- Pharmaceuticals: JPY9,525bn (US$109.25bn) in 2010 to JPY9,664bn (US$117.88bn) in 2011; +1.5% in local currency terms and +7.9% in US dollar terms. Our forecast has been revised up from Q311 due to macroeconomic factors and additional analyst intervention.
- Healthcare: JPY39,432bn (US$452.30bn) in 2010 to JPY39,624bn (US$483.21bn) in 2011; +0.5% in local currency terms and -6.8% in US dollar terms. Our forecast has been revised down from Q211 due to macroeconomic factors and additional analyst intervention.
- Medical Devices: JPY2,755bn (US$31.60bn) in 2010 to JPY2,846bn (US$34.71bn) in 2011; +3.3% in local currency terms and +9.8% in US dollar terms. Our forecast has been revised up from Q311 due to macroeconomic factors and additional analyst intervention.
Business Environment Rating: Japan remains the most attractive pharmaceutical market in Asia Pacific, according to BMI's Business Environment Ratings (BERs) for Q411. The country's score of 68.9 out of 100 is unchanged for the previous two quarters. Japan scores highly for all BER sub-sectors, particularly Industry Risks, which comprises Intellectual Property Regime, Approvals Process and Policy/Reimbursement.
Key Trends & Developments
- In July 2011, Teva Pharmaceutical Industries acquired 100% of the outstanding shares of Japan's Taiyo Pharmaceutical Industry for US$934mn in cash. Taiyo is the third largest generic drug manufacturer in Japan, with a portfolio of over 550 products and sales of approximately US$530mn in 2010. Teva will also gain access to Taiyo's strong research and development (R&D) team, local regulatory expertise and a state of the art production facility. Following the acquisition, Teva expects to attain US$1bn in sales in Japan, ahead of its original 2015 target.
- In May 2011, Takeda acquired privately-held Swiss pharmaceutical company Nycomed for US$13.7bn. The cash payment is inclusive of Nycomed's net debt, which stood at EUR3.60bn (US$5.05bn) at the end of 2010, and will be financed in part with a US$7.3-8.5bn loan. The acquisition, expected to be completed by September 2011, does not include Nycomed's US dermatology business, which Takeda said did not offer synergies with its own operations.
BMI Economic View: Real GDP contracted by 0.9% quarter-on-quarter (q-o-q) in Q111, sending the Japanese economy back into recession. While the March earthquake and tsunami were partially to blame, the country's underlying economic weakness was evident in the data, suggesting that there will be no swift recovery once the crisis passes. BMI sees real GDP growth coming in at 0.7% in 2011 and 1.8% in 2012, compared with consensus expectations of 1.3% and 2.0% respectively, and note that the risks to both of these are weighted to the downside.
BMI Political View: Prime Minister Naoto Kan is facing increasing pressure from lawmakers to step down, a move believed to come in August 2011. Indeed, the recent resignation of Reconstruction Minister Ryu Matsumoto a week after his appointment further reinforces our view. The Japanese political scene is expected to remain chaotic over the coming years, although a grand coalition should provide some stability until the end of the current parliamentary term in 2013.
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