Japanese Pharma Market.
1. How has growth of the domestic pharmaceutical industry been hampered by biennial drug price reductions?
One of the most significant challenges faced by pharmaceutical companies in the Japanese market is the practice of biennial price cuts. Overall, the average cut of 5.64% will be applied on a drug price basis in the 2014 price revisions similar to the price cut of 6% applied in the 2012 price revisions. Market expansion based re-pricing rules as well as the special additional price cut being implemented this year on products for which the first generic was approved five years ago and have less than 20% generic replacement rate by volume will hamper the growth of the domestic pharmaceutical industry.
2. Why has Japan become an attractive market for big pharma?
Japan will remain an important market for the pharmaceutical industry. It is the world’s second largest pharmaceutical market and presents a number of opportunities, including an aging population, together with a relatively low barrier to reimbursement compared to many EU markets. Indeed, the Japanese reimbursement system is streamlined compared to the complicated processes companies need to go through in other countries, with pharmacoeconomics rarely used to make listing decisions. Moreover, Japan has a much lower penetration of generics compared to most of the major markets which is advantageous for the big pharma.
3. Will patented branded products achieve greater market penetration this decade?
The new drug development premium awarded to innovative products shields the products from biennial National Health Insurance (NHI) price reductions during their patent protection period. This premium will enable patented branded products in its market expansion. During the 2014 NHI price revisions, 397 active ingredients (758 products) have been granted the exemption, over and above the 367 active ingredients considered for the treatment in the 2012 revision.
Posted in Strategy.