EFPIA-Japan and IMS drug market forecast for Japan
based on current drug pricing policy proposals

31 May, 2017
Ole Mølskov BechChair, EFPIA Japan

Lessons from the drug market forecasts
The drug market in Japan will be flat or slightly
declining over the next decade
Japan likely to be the lowest growing market
among major markets
The analysis clearly suggests: Japan cancontinue to reward innovation AND makebudget savings
www.efpia.eu2

The drug market in Japan has grown
only modestly in recent years
CAGR 1.7% (2013-2016)

Market size (Unit: Tn Yen)

129.8

9.7

10.6

10.3

108

9.1%
5.5%
*2-0.9%6-2.7%

4202013

2014

2015

2016

Source: IMSBase JPM*1 EFPIA-QuintilesIMS Forecast*2 Forecast since project started before end of FY 2016.
Actual figure was -3.6%

2017Q1:-7.2%

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Drug budget is only 20-25% of healthcare spending,and is growing more slowly than the other 75%+
Market growth (comparison b/w medical expenditure and drug expenditure)*1,2Medical expenditure (Forecast by MHLW)Drug expenditure (Result of this project)

Market size (Unit: Tn Yen)

7060

3.28%

5040-0.14%100
FY2012

FY2025

Source: IMSBase JPM, MHLW Social Security Council Medical Insurance Committee,*1 “References II on National Assembly for Social Security System Reform ‘Arrangement of discussion’ (Medical / nursing carefield)”, 2013/5/16*2 Recalculation of Quintiles IMS estimation of drug expenditure 2016-2026, “Base” scenario forecast on this project, adjustingtime period and including real data for 2012-2015
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New drug prices in Japan are now low byinternational comparison
Comparison of Median Prices between Japan, EU3, and US2011

2012

2013

2014

2015

2016

vs.

+13%

+25%

+3%

-20%

-20%

-11%

vs.

-6%-5%

-36%

-23%

-27%

-31%

Note: Analysis of new products listed in Japan from 2011 to August 2016 that are also listed in France, Germany, or the UK (n= 146). EU3 price is the average price across France, Germany, and the UK. US price reflects the average manufacturer
rebate on branded products in Medicare Part D (35%) as estimated by the IMS Institute. Foreign currency rate is based on
moving average in the year before listing in Japan, consistent with MHLW methods.
Source: IMS Institute, 2016, Estimate of Medicare Part D costs after accounting for manufacturer rebates;

Source: PhRMA

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5Japan will be the market with the lowest growth
10%

8%

8%

6%
5%

5%

5%

2%

2%2%

Germany

UKFrance

5%
4%
2%

2%

0%
US-2%

Japan-1%

CAGR 2016－21
US
5~8%
Japan-1~2%
Germany
2~5%
UK
2~5%
France
2~5%
Italy
2~5%
Spain
1~4%
Canada2~5%Developed2~5%
China
6~9%
Brazil
6~9%
India
10~13%
Russia6~9%Turkey10~13%
Mexico3~6%
Emerging
6~9%

Source: QuintilesIMS Market Prognosis 1Q 2017
＊1 Forecast by unified model for all countries. Forecasting
methods
andmarket
definitions
areAll Rights Reserved. Confidential and Proprietary.
Reprinted with permission
different from EFPIA-QuintilesIMS forecast

The Price Maintenance Premium has worked! (1)The Drug Lag has been reduced considerably
Application lag – current status and future trend *1,2Median 41.5 mths

15.0 mths

5.0 mths
29%Lag more than 1 year71%

Lag of under 1 year

52%
82%

48%
18%
Yr. of Japaneseapplication

2006-20092010-20142015-2019(prospective)*1 Covers the 27 respondents with products applied for or to be applied for in Japan (excluding products subject to a development request etc.)*2 Covers those of the above products with an identifiable application lag[Source] ‘Follow-up survey on impact on new drug development of the price maintenance scheme’ (PhRMA) conducted at the end of 2014 on 29 major Japanese, USand European firms[Definition of terms] Application lag: The delay (in months) in the filing of an applications in Japan following the earliest application filed amongst the countries of theUS and EU5 (UK, France, Germany, Italy and Spain)

Source: PhRMA

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7

The Price Maintenance Premium has worked! (2)Investment in development in Japan has risen considerably
Number of EFPIA & PhRMA
sponsored clinical trials 2015825

Japan Development Pipeline

1,400
1,200

CLINICAL TRIALS*
Drugs in development(+21% since 2013)18,095

Price MaintenancePremium

SITES**(+55% since 2013)

AnnualGrowth11.1%

1,000800
AnnualGrowth
2.3%6004002000# of clinical trial conducted201～

101～200

31～1002004 2006 2008 2010 2012 2014 2016
Preclinical

Phase I

Phase II

Source: PhRMA

Phase IIIwww.efpia.eu

8Price Maintenance Premium rewards
innovation, not foreign companies!
And not all innovations receive the premium• By sales, only half ofproducts eligible for PMP
receive the premium• PMP is awarded to both
domestic and foreigncompanies
Domestic
内資系

Premium
総加算額

Foreign
外資系

51.5 Bio yen

Total

54.5 Bio yen

49%
51%

Number of
会社数
companies

52 companies

Numberof
製品数
products
Sales with PMP
適応対象売上Sales without PMP
適応対象外売上though eligible

Data: 2016

38 companies

373 Products
0%

20%

40%

450 Products
60%

80%
100%
Data: FY 2016

RISFAX (MHLW reports to LDP Healthcare committee)

EFPIA/QuintilesIMS

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9

EFPIA is willing to make a contribution tosustainability of healthcare system… IF the pricemaintenance premium is continued
EFPIA acknowledges that sustainability of universal healthcare coverage means that healthcare services
need to be managed more efficiently across the entire value chain to control costs
EFPIA is willing to support the proposal for an immediate price revision following market expansion
by additional indications (provided that it is restricted to cases where the product has huge sales andwhere the additional indication(s) increases sales significantly)
EFPIA is willing to support annual re-pricing (provided that adjustment is limited to LLP and Gx
discounting from the NHI price beyond a certain percentage)

EFPIA is open to discussing alternatives to the cost-plus price-setting method

EFPIA is open to alternative measures of the US reference pricewww.efpia.eu10Even the “high” case is for a broadly flat
pharmaceutical market
High case assumes: (i) expansion of price maintenance premium to all eligible products; (ii) 5
more new drugs developed than in base or low cases; (iii) later achievement of 80% Gx rate;(iv) annual price revision for LLP and Gx with large deviation; and (v) launch of highly
innovative drugs ¥500 Bn / year at peak time
Market growth in high case (The entire market, unit: ¥Tn) *1

10.6
9.8
9.3

4.2

4.5

10.3

10.6

10.3

9.75.4
4.7

5.4

5.6

5.5

10.2

5.2

9.7

9.7

9.7

5.0

5.2

5.3

10.0

10.0

5.6

5.7

10.4

10.3

6.1

6.1

Ox
0.0
3.6

3.6

3.2

3.1

2.7

0.2
2.4

0.4
2.0

0.7
1.8

0.7
1.5

0.6
1.4

0.6

0.7

0.8

0.9

0.8

LLP(b)

1.3

1.2

1.1

1.0

0.9

LLP(a)

0.9

1.1

1.2

1.4

1.5

1.7

1.7

1.8

1.9

1.9

1.9

1.9

1.9

1.9

1.9

Gx

0.7

0.7

0.6

0.7

0.6

0.6

0.6

0.6

0.6

0.6

0.6

0.6

0.50.50.5

Other’12’13

’14

’15

’16

’17

’18

’19

’20

’21

’22

’23

’24

’25

’26 (FY)

Source: IMSBase JPM*1 Ox: Original products, LLP (a): generic drugs launched before 2016, LLP (b): generic drugs launched after 2017, or planned to be launched, Gx: Generic products
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All three scenarios in the IMS analysis conclude that thedrug market will be flat or declining over the next decade
市場の成長 (シナリオ別)(兆円)
121110.6
9.8

10

10.3

10.610.5
10.5

9.7

9.3

10.3
9.9
9.3

10.2
9.7

9.7

9.7

9.0

9.2

9.0

8.4

8.3

98

10.0

10.0

8.9

9.0

9.0

8.0

8.1

8.0

9.7

10.4

10.3

9.1

9.0

-1.5% per year

8.1

8.0

-2.5% per year

Differences include:- the low case assumes scrapping of
PMP- the high case assumes that all newproducts receive the PMPOther assumptions explained in thefollowing presentation

7

1

拡大シナリオ

基本シナリオ
縮小シナリオ

0

’12

’13

’14

’15

’16

’17

’18

-0.3% per year

’19

’20

’21

’22

’23

’24

’25

’26(年度)

Source: IMSBase JPM
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Lessons from the drug market forecasts
The drug market in Japan
will be flat or slightly
declining over the nextdecade• The analysis show that even in the optimistic high case, the drug
market in Japan will be declining -0.3% p.a. during the coming 10 years• Average annual growth is forecast to be -1.5% in the base case, and forthe low case -2.5%

Japan likely to be thelowest growing market
among major markets• The EFPIA-J and QuintilesIMS forecast only focused on Japan and no
direct comparison between this analysis and other markets can bemade.
• However other analysis of other developed markets suggest they arelikely to grow (+2% to +5% p.a. during the period 2016-21)• With a declining market in Japan and growth in the rest of the world
there is a risk Japan will be deprioritized for global investment andthe drug lag might worsen again

The analysis clearlysuggests: Japan cancontinue to reward
innovation AND makebudget savings• The drug budget is already set to be well controlled, primarily as aresult of existing measures and the higher Gx target• Based on the EFPIA-QuintilesIMS simulation it is clear the PMP can be
maintained while achieving the government’s desired control of thedrug budget

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THANK YOU