www.EUbusinessinJapan.eu

The Biopharmaceuticals sector in Japan:
Government regulations, the competitive
situation and how to find an entry point A primer for European SMEs.

July 2019
Professor Rolf Schmid

EU-JAPAN CENTRE FOR INDUSTRIAL COOPERATION - Head office in Japan
EU-JAPAN CENTRE FOR INDUSTRIAL COOPERATION - OFFICE in the EU
Shirokane-Takanawa Station bldg 4F
Rue Marie de Bourgogne, 52/2
1-27-6 Shirokane, Minato-ku, Tokyo 108-0072, JAPAN
B-1000 Brussels, BELGIUM
Tel: +81 3 6408 0281 - Fax: +81 3 6408 0283 - TokyoOffice@eu-japan.gr.jp
Tel : +32 2 282 0040 –Fax : +32 2 282 0045 - office@eu-japan.eu
http://www.eu-japan.eu / http://www.EUbusinessinJapan.eu / http://www.een-japan.eu

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Contents
1 Executive summary ................................................................................................................................................... 4
2 Scope of the report ................................................................................................................................................... 6
3 Introduction .............................................................................................................................................................. 7
4 Japan’s healthcare system ........................................................................................................................................ 8
4.1 Introduction ................................................................................................................................................................ 8
4.2 Healthcare expenditure .............................................................................................................................................. 8
4.3 Japan’s Pharmaceutical and Biopharmaceutical Industry ........................................................................................ 10
4.4 Public R&D in biomedicine ........................................................................................................................................ 11
4.5 Japan Agency for Medical Research and Development (AMED) .............................................................................. 11
4.6 Japan’s market for pharmaceuticals and biopharmaceuticals ................................................................................. 12
4.7 Japan’s biopharmaceutical market: the competitive situation ................................................................................ 12
4.8 Biopharmaceuticals ................................................................................................................................................... 13
4.9 Biosimilars ................................................................................................................................................................. 15
4.10 Cell products ........................................................................................................................................................... 17
4.11 Genomic medicine and gene therapy ..................................................................................................................... 19
5 Market access ......................................................................................................................................................... 19
5.1 Categories of pharmaceutical and biopharmaceutical products .............................................................................. 19
5.2 The Pharmaceutical Affairs Law and the Pharmaceutical and Medical Devices Agency (PMDA) ............................ 20
5.3 Authorisation requirements for marketing .............................................................................................................. 21
5.4 Authorisation requirements for manufacturing ....................................................................................................... 22
5.5 Regulatory review and clinical trials ......................................................................................................................... 22
5.6 Approval criteria for generics.................................................................................................................................... 24
5.7 Orphan drugs ............................................................................................................................................................ 24
5.8 Innovative products and bio-products: the forerunner (“Sakigake”) procedure ..................................................... 24
5.9 Pricing........................................................................................................................................................................ 25
5.10 Marketing and sales ................................................................................................................................................ 26
5.11 Postmarketing and Good Vigilance Practice (GVP) ................................................................................................. 27
6 Cultural business practice ....................................................................................................................................... 28
7 Opportunities and access points ............................................................................................................................. 29
7.1 General remarks........................................................................................................................................................ 29
7.2 Access points ............................................................................................................................................................. 29
7.3 PMDA’ consulting services are indispensable........................................................................................................... 30
7.4 Further recommendations to SMEs .......................................................................................................................... 30
8 Actors, clusters, fairs ............................................................................................................................................... 32
8.1 in Japan ..................................................................................................................................................................... 32
8.2 in Europe ................................................................................................................................................................... 33
8.3 Pharmaceuticals-related Trade Fairs in Japan .......................................................................................................... 34
9 Literature................................................................................................................................................................. 34

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Abbreviations
$
AMED
API
ATMP
CRO
CTD
DMF
eCDTD
EMA
FDA
FMR
FY
G-CSF
GCP
GMP
GPSP
GQP
GVP
IB
ICH
ICH-GCP
IND
IRB
J-GCP
JETRO
JST
MAH
METI
MEXT
MHLW
NEDO
NHI
NME
OTC
PAFC
PIC/S
PMDA
QMS
R&D
SMO

US-Dollars
Agency for Medical Research and Development R&D Agency of the MHLW
Active pharmaceutical ingredient Active pharmaceutical ingredient
Advanced therapy medicinal product (advanced therapy product)
Contract research organisation
Common technical document. All the documents required for a marketing authorisation for a medicinal
product
Drug master file Confidential information of an API manufacturer on the manufacturing process
Electronic common technical document. The entirety of the documentation for a marketing authorisation
for medicinal products in digital form.
European Medicines Agency European Medicines Agency
Food and Drug Administration American health authority
Foreign manufacturer registration
Fiscal year (April 1 – March 31
Granulocyte cell-growth factor
Good clinical practiceGood manufacturing practiceGood post-marketing study practiceGood quality practiceGood vigilance practiceInvestigator brochure central document for approval procedure
International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use
Good clinical practice in accordance with the ICH
Investigational new drug new, not yet approved drug
Institutional review board protects patients' interests, required for clinical trials
Good clinical practice, Japanese prescription
Japan External Trade Organization Foreign Trade Organisation of METI
Japan Agency for Science and Technology Project Management Agency of MEXT
Marketing authorization holder binding certificate for one applicant
Ministry of Economy, Trade and Industry Ministry
Ministry of Education, Culture, Sports, Science and Technology Ministry
Ministry of Health, Labour and Welfare Ministry
New Energy and Industrial Technology Development Organization Project executing agency of METI
National Health Insurance
New molecular entity"Over the counter", non-prescription drug
Pharmaceutical Affairs and Food Council Approval Committee of the MHLW
Pharmaceutical Inspection Cooperation Scheme International Association for the Harmonization of GMP
Regulations
Pharmaceutical and Medical Device Agency Approval Agency of the MHLW
Quality management system
Research and development
Site management organisation

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1 Executive summary
Japan is a highly industrialised nation with a large population, but limited space and few natural resources. National
budget deficits for the import of food and energy are compensated by the manufacture and export of industrial
products such as automobiles, machines, optical and IT equipment, chemicals or pharmaceuticals. Innovation plays adominant role in order to stand national competition and be successful in the international markets.
For most of its history, Japan was ruled by central government and confined to its insular boundaries. As a consequence,laws and regulations tend to follow top-down principles and are generally followed. Limited space and Confucian ethics
have led to a social conduct which offers respect towards one’s seniors and senior people in general. In return,superiors, including the government, are expected to mediate conflicts and care for the general welfare.
In a society composed for over 98% of ethnic Japanese, these attitudes have led to a welfare state where state andcompany insurance systems largely cover disease risks. In return, the state controls the cost structure of healthservices, e. g., through setting the prices for drugs and medical services. In this system, prices of established products
are successively curbed, whereas innovative drugs or services receive a bonus price.
This well-balanced system is challenged threefold: First, by the “bubble economy” of the mid-1980s, which drew muchcapital from Japan’s economy and has left the nation with a national debt of over 250% of its GDP. Second by the
economical rise of China, which has become a fierce competitor for innovation and markets at the global level. Thirdby the ripples of an over-ageing society, which menaces not only Japan’s healthcare system but also leads to anincreasing shortage of labour.
The Japanese government under Prime Minister Shinzo Abe has answered to these challenges with a Strategic
Innovation Promotion Program (SIP)1 initiated in 2014. Its objective is to promote innovative science and technology,
to accelerate national economic development and to open up new markets for the Japanese industry overseas. Fiveamongst its 11 projects are related to biotechnology, and one of the targets is the pharmaceuticals industry.
The Japanese market for pharmaceuticals is amongst the largest in the world and, through many international
networks opened to innovative products and services. In 2016, nearly one fifth of all drugs came from abroad, andforeign companies served about 70% of the particularly innovative market for biopharmaceuticals. Although Japanesepharmaceutical companies generate 70% of sales and are expanding internationally, they are not amongst the global
industry leaders. The Japanese market thus offers good opportunities for European SMEs with innovative
biopharmaceutical products or services such as blood products, therapeutic antibodies, vectors for gene therapy orcell products. In the latter category in particular, Japan aims at international leadership, readily integrating innovationfrom abroad.
Drugs are heavily regulated in Japan, and even more stringent rules apply to biopharmaceuticals. This concerns
approval procedures, quality control, distribution and price maintenance. Although the regulatory authority PMDA is
increasingly following international rules, it requires pharmacodynamic and clinical studies with a reference to theJapanese population. Some documents and many consultations require knowledge of the Japanese language andbusiness culture. Japanese service providers are therefore indispensable.
The National Health Insurance (NHI) sets the prices for pharmaceutical products. Its primary task is to curb the increasein healthcare costs for the rapidly ageing population, in particular by increasing the approval of generics and biosimilars.
In fiscal 2017, these were already 70% of all prescribed drugs, and the target for 2020 is 80%. The NHI is also
continuously reducing prices for products that have already been on the market for some time, and the overall size of1

https://www8.cao.go.jp/cstp/panhu/sip_english/sip_en.html
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the pharmaceutical market could therefore stagnate. Subsidies and accelerated approval procedures, on the other
hand, support novel drugs (“forerunners = 先駆け Sakigake”), in the sense of “first-in-class” pharmaceutical entities,
if they show high efficacy, and especially if they were first developed in Japan. This also applies to new drugs for thetreatment of rare diseases (orphan drugs), paediatrics and regenerative medicine.
90% of all drugs require a prescription, and the prescribing physician may charge a "physician bonus" for this. The
brand loyalty of Japanese patients and the distribution channel make market access difficult for foreign companies. In
fact, more than 80% of all medication is distributed by the channels of only four companies, and marketing of drugsby the internet is limited to over-the-counter drugs (OTC), and even then burdened by severe regulations. As aconsequence, a partnership with a well-chosen Japanese contract research organisation (CRO), a Japanese company,or an international company already operating in Japan as a “marketing authorization holder” (MAH) is therefore
strongly recommended. Over 50 CROs offer such kind of services, and license scouts of Japanese or international
pharmaceutical companies can be met at international trade fairs such as BioEurope or BioJapan.

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2 Scope of the report
This report covers an introduction to the Japanese healthcare system and to the healthcare market, one of the largest
in the world. Special attention is given to the market of biopharmaceuticals. Major players such as the pharmaceuticalindustry and the Japan Agency for Medical Research and Development (AMED), the “NIH of Japan”, are shortly
described.
This introduction is followed by a description of pharmaceutical products, with special reference tobiopharmaceuticals and biosimilars. It is outlined, that therapeutic antibodies, which constitute the major part of thebiopharmaceutical market both in value and weight, are mostly introduced from abroad, and that Japan’s share ininnovation in this field is below average of other industrial nations. However, Japan is an international leader in thedevelopment of cellular medicines.
The second part of this report deals with the regulations for marketing or producing pharmaceuticals andbiopharmaceuticals for the Japanese market, governed by the Pharmaceutical Affairs law and overseen by PMDA, thePharmaceuticals and Medical Devices Agency. Among standard procedures, which to a considerable part are alreadybased on international regulations, Japan supports the introduction of innovative drugs through a “first-in-class”
process (“Sakigake process”), offering opportunities to European SMEs or start-ups with highly innovative products.
It is further illustrated, how the National Health Insurance (NHI) regulates prices and promotes the use of generics,
and which measures need to be taken for the marketing and sales of pharmaceuticals on the Japanese market.
Special emphasis is put on what European SMEs and start-ups should consider to best prepare for an entry into thehuge, growing but sophisticated Japanese market for biopharmaceuticals.
Part of this report is based on an earlier account on this subject in German language, published in October 20182.

2

Rolf Schmid, Gesundheitsmarkt Japan - Arzneimittel und Biopharmazeutika, Germany Trade and Invest (GTAI), October 2018
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3 Introduction
Japan is a highly industrialised nation whose economy is largely based on science and technology (S&T). In 2017, thecountry had one of the biggest technology pools in the world, with over 1,060 million scientists and engineers; businessenterprises, including the pharmaceutical industry, employed > 586,000 researchers and technicians 3 . For many
decades, Japan has been amongst the world leaders in spending on R&D (2017: 3.48% of GDP), patent applications
and scientific publications. Typical for Japan are the so-called research associations, temporary and government-cofunded collaborative research partnerships amongst industry, universities and government research centres. As wewill see in chapter 4.7, this approach has also been chosen for Japan’s biopharmaceutical industry.
Increasing competition with its Asian neighbours, especially China, is threatening Japan's economic and technologicalsupremacy in Asia. With more than five million people in S&T, China's technology pool is already five times larger thanJapan's, and China continues to increase its R&D expenditure from currently 2.1% of GDP.
Among Japan's specific problems are a high public debt (2018: 253% of GDP) 4 which limits public expenditures, and a
rapidly ageing population (Table 1). As a result of high life expectancy, a persistently low fertility rate of 1.45 births per
woman and negligible immigration, one in four Japanese (almost 28% of the population) was over 65 by 2017; by 2050,
the proportion could rise to over 35%5. As a result, there is already a shortage of labour in many sectors: health andsocial expenditures for the elderly are on the rise, and so is national debt.

Table 1: Population development in Japan5

Total population (million)

2016
2018
126,9
126,2
Population growth: -0.10%
Life expectancy at birth (2015): women 87.05, men 80.79
Age structure (2017)






Forecast 2020
125,30-14 years: 12.8%
15-24 years: 9.6%
25-54 years: 37.5%
55-64 years: 12.2%
65 years and over: 27.9%3https://www.stat.go.jp/data/nenkan/index1.html
https://tradingeconomics.com/japan/government-debt-to-gdp
5
https://www.stat.go.jp/english/data/handbook/pdf/2017all.pdf
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4 Japan’s healthcare system
4.1 Introduction
Japan's ageing population has a high purchasing power and is health-conscious. The state reimbursement systemfollows the principle of public welfare and protects its citizens well against the risk of illness. In 2016, pharmaceuticals
generated sales of around $108 billion (section 4.6). This makes Japan's pharmaceutical market the third largest in
the world. Between 2008 and 2015, it grew at an average annual rate of 3.4%, stronger than Japan's GDP6.
Amongst the causes of death of the Japanese, nearly one third relate to malignant neoplasms (Figure 1). Cardiac
diseases are less frequent compared to Western industrialised countries. A relatively high proportion of
cerebrovascular diseases and pneumonia is noticeable (2017: 8% and 7% of all deaths, respectively)7. Lifestyle diseases
are also on the rise: research by Japan’s Ministry of Health, Labour and Welfare (MHLW) at the end of 2016 suggeststhat 10 million Japanese adults have diabetes8.

Fig. 1: Causes of death in Japan, 20178

4.2 Healthcare expenditure
Japan's healthcare system is highly developed and based on the concept of public welfare. Public health spending
accounted for over 11% of GDP in 2017 (Table 2).

Table 2: Health expenditure and health-related facilities9

6

https://www.jetro.go.jp/ext_images/en/invest/attract/pdf/en_2016_life.pdf
http://nbakki.hatenablog.com/entry/Top_10_Causes_of_Death_in_Japan_20178https://www.japantimes.co.jp/news/2017/09/21/national/science-health/diabetes-continues-trend-japan-10-millionsuspected-adult-cases/#.WvxSXy_qhBw
9https://www.exportinitiative-gesundheitswirtschaft.de/EIG/Redaktion/DE/Publikationen/PDF/gesundheitsmarkt-japan.html
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Total health care expenditure ($ billion)
Health expenditure per capita ($)
Share of GDP (%)
Share of government expenditure (%)
Share of private expenditure (%)
Hospitals with > 20 beds
Number of doctors (about 2/3 of them work in hospitals)
per 100,000 inhabitants
Number of pharmacists

2015
418.3
3,268.4
10.9
84.0
16.0
8,596
316,199247
294,8552017
467.9
3,669.9
11.1
84.2
15.8
8,481
326,430256
308,735

According to estimates by the consulting firm McKinsey, higher spending on the elderly could drive this share up to
13.5% by 203510. The government is responding with cost containment measures, such as government intervention
on pricing and the approval of more generic prescription drugs. It also supports innovation by inviting newtechnologies, services and regulations to turn the healthcare market into a growth industry. IT-supported health care,scientifically optimised nutrition, age-appropriate medicine, care by robots and prosthetic products are booming fields
of industrial development, which the Ministry of Economy Trade and Industry METI also frequently supports inresearch associations with universities and state research centres. A focus lies on improving the quality of life of theelderly which aims to maintain the state of not-yet-ill-being as far as possible into old age11.
Japan's state and company insurance systems largely cover disease risks. The state controls the cost structure and thus
favours laboratory tests, equipment-based medicine and prescription drugs. Employers are obliged to send theiremployees to preventive medical check-ups every year. There are weaknesses in the scarcity of medical personnel andin excessively long hospital stays.
More than 90% of all clinics are private day clinics without a state license (medical practices). They are run as a familybusiness. In contrast, two thirds of the 300,000 doctors work in Japan's 8,500 hospitals. According to WHO surveys,
the Japanese spent about $75 billion privately on their health in 2016. Mild drugs with a low concentration of active
ingredients such as vitamins or plant preparations for the treatment of colds, pain or stress are popular - they allow
people to continue working even if considered ill according to Western standards.
Typical for Japan are the many food products with state-registered health or functional claims (FOSHU, food of
specified health use, and FFC, food with function claims). At the end of 2016, 1,271 food items carried an FOSHU label
and about 500 an FFC label, and their market volume was estimated at over $20 billion12,13.

10https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/improving-japans-health-care-system
https://www.j-mibyou.or.jp/mibyotowa.htm
12https://www.nutraingredients-asia.com/Article/2016/10/10/Japan-moves-beyond-Foshu-Over-400-products-approved-undernew-health-claims-regime-in-last-year13
https://www.wysiwyg.co.jp/service/systematicreview/systematicreview-e/
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4.3 Japan’s Pharmaceutical and Biopharmaceutical Industry
In an international comparison, Japan’s pharmaceutical companies have not yet reached the top ranks of international
pharmaceutical manufacturers (Table 3). However, the leading companies are networked worldwide, execute mergers
and acquisitions worldwide14 and usually operate R&D centres in the US and Europe.
Table 3: Japan's largest pharmaceutical companies15
Market Capitalisation on March 16, 2019

(US$ bn)

Ranking (World)

Takeda Pharmaceutical Industries Co Ltd
Chugai Pharmaceutical Co Ltd
Astellas Pharma Inc.
Daiichi Sankyo Co Ltd
Eisei Co. Ltd.
Otsuka Holdings Co Ltd
Shionogi & Co. Ltd.
for comparisonJohnson & Johnson (J&J)
Roche
Pfizer Inc.

65.77
37.67
29,97
25.75
23.51
22.86
19.20

15
27
29
30
31
34
38

366.40231.99231.95

1
2
3

Amongst over 300 pharmaceutical companies in Japan, the largest have formed the Japan Pharmaceutical
Manufacturer Association (JPMA)16. The top twenty of these companies spent over $13 billion on R&D in 2017 17.
Japan’s pharmaceutical industry has long been familiar with the development of biological active ingredients: as early
as 1945, more than 80 Japanese companies produced penicillin18. Today, many JPMA members do research on andmanufacture biopharmaceuticals. They are organised in the Japan Bioindustry Association (JBA)19, an association close
to the Ministry of Economics and Trade METI. The JBA organises BioJapan in Yokohama, Japan’s largest pharmaceuticaland biotech trade fair. It takes place annually and offers European companies a good opportunity to get to know themarket and its players (see section 8.3).
Beyond “big pharma”, there is a sizeable group of Japanese venture companies and start-ups targeting new
biopharmaceuticals. A full review is beyond the format of this report, but a small selection of such companies and theirtargets is provided in Table 420.
Table 4: Japanese venture companies and start-ups targeting biopharmaceuticals
Company nameEdiGENE Inc.

TargetURL
Therapeutics for genetic disorders based on gene http://www.edi-gene.com
editing

14

https://asia.nikkei.com/Business/Business-trends/Japan-Inc-signed-record-777-overseas-M-A-deals-in-2018https://www.value.today/world-top-companies/pharmaceutical16
http://www.jpma.or.jp/english/17
https://eolas-bio.com/market/
18
https://www.eubusinessinjapan.eu/sectors/healthcare-medical/pharmaceuticals
19
https://www.jba.or.jp/en/20
https://www.j-startup.go.jp/en/about/
15

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Quantum
Biosystems Semiconductor-based single-molecule geneInc.
sequence analyser
PeptidDream Inc.
Peptide discovery platform for identification of
drug targets
Megakaryon
Blood platelets from iPS cells
Corporation
ReproCELL Inc.
Regenerative cell products starting from iPS cells
including gene editing
RegCell Co., Ltd.
Immunotherapies bysed on antigen-specificregulatory T-cells (Tregs)

http://quantumbiosystems.com
https://www.peptidream.com
http://www.megakaryon.com/en/
https://www.reprocell.com
http://regcell.jp/home_en

4.4 Public R&D in biomedicine
Japanese academia has an excellent research infrastructure for life sciences and pharmaceuticals. A detailed
description of universities and public research institutes involved in biomedical R&D is beyond the scope of thisreview. Table 5 contains a selection of major players.
Table 5: Some major players in Japanese public biomedicine R&D
RIKEN
NIBIO

University of Tokyo
Kyoto University
Hospital
Kyoto University
Kobe University
Osaka University

Keio University
Tokyo University of
Science

Center for Integrative
Medical Science
National Institute of
Biomedical Innovation
Institute of Medical
Science
Kyoto University HospitalCenter for iPS Cell
Research and Application
School of Medicine, Dept.
of iPS cell applications
Center of Medical
Innovation andTranslational ResearchInstitute of Advanced
Biosciences
Research Institute for
Biomedical Sciences

http://www.riken.jp/~/media/riken/about/organization/imse-20190701.pdf
http://www.nibiohn.go.jp/nibio/english/index.html,
https://www.nibiohn.go.jp/en/activities/biodrugdevelopment.html
http://www.ims.u-tokyo.ac.jp/imsut/en/
http://www.kuhp.kyoto-u.ac.jp/english/index.html
http://www.cira.kyoto-u.ac.jp/e/
http://www.lab.kobe-u.ac.jp/gmedipsc/en/member/index.html
http://www.comit.med.osaka-u.ac.jp/en/

http://www.iab.keio.ac.jp/en/about/index.html
https://www.tus.ac.jp/en/labo/research_life.html

4.5 Japan Agency for Medical Research and Development (AMED)In acknowledgement of the leadership of the US National Institute of Health (NIH), the Japanese government decided
in 2015 to strategically align drug research, forming the Japan Agency for Medical Research and Development(AMED)21. Thanks to generous budgets, AMED has already managed to bundle research priorities that were previously
21

https://www.amed.go.jp/en/index.html
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scattered across academia, and to network them with projects in the pharmaceutical industry. Examples inbiopharmaceutical-related fields are a large national project on genomic medicine (see section 4.11), and national
programmes for the treatment of rare diseases, cancer therapy or the therapy of psychiatric and neurologicaldisorders22.

4.6 Japan’s market for pharmaceuticals and biopharmaceuticals
Japan’s pharmaceutical market is the world’s third largest, behind the USA and China, and shows a steady growth. Its
market size reached ~$104 billion in 201823.
More than 90% of all medications are prescription-only. Almost 90% of them are protected by patents, but important
blockbusters will become patent-free in the next few years. In 2016, generic drugs accounted for only about 14%(value-based) of total pharmaceutical sales. However, their share is steadily growing. Imports of foreign drugs
accounted for around 18% in 2016. In 2017, the EU exported pharmaceutical products worth EUR 8.1 billion to Japan,
corresponding to a market share of around 8% (Table 6).
Table 6: The Japanese pharmaceutical market24

Pharmaceuticals sales ($ billion)
Pharmaceutical sales per capita ($)
Of which were prescription drugs (%)
Of which were patented (%)
Generics (% of pharmaceutical sales)
OTC drugs (% of pharmaceutical sales)
Imports ($ billion)
Imports as a share of pharmaceutical sales (%)*forecasts

2014
106,137
828.
94
87.8
12.2
6
19,84318.4

2016107,805
843.9
94.1
86.4
13.6
6.1
19,13518.3

2018*
104,005
817.7
94.1
84.9
15.1
6.2
19,44018.5

2022*
104,818
833.9
94
81.9
18.1
6.4

4.7 Japan’s biopharmaceutical market: the competitive situation
Biologically active substances are considered the driving force behindinnovation in the pharmaceutical industry. In this aspect, Japan islagging behind the USA and Europe (Figure 2).

Fig. 2: Share of biopharmaceutical sales 201625

22

https://www.amed.go.jp/content/000002892.pdf
https://www.export.gov/article?id=Japan-Pharmaceutical24
https://www.exportinitiative-gesundheitswirtschaft.de/EIG/Redaktion/DE/Publikationen/PDF/gesundheitsmarktjapan.pdf?__blob=publicationFile&v=825
http://www.jpma.or.jp/opir/research/rs_071/paper_71.pdf
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According to a survey by the Japan External Trade Organization (JETRO), biopharmaceuticals accounted for only 12%of Japanese pharmaceutical sales in 2014, compared with 30% on the world market. By the end of 2016, foreigncompanies such as Sanofi, Pfizer, Roche, MSD and Novo Nordisk dominated over 71% of the Japanesebiopharmaceutical market with 95 products, and four out of the ten biosimilars approved in Japan until July 2017 camefrom foreign companies (see section 4.9). JETRO expects that the turnover of biotechnologically produced
pharmaceutical products in Japan will increase by more than 8% annually and reach a value of 47 billion $ in 2020. The
market for biosimilars is expected to grow even faster, by as much as 35% and generate sales of 4 billion $ (see section
4.9)26.

4.8 Biopharmaceuticals
A recent discussion paper from the Japanese Pharmaceutical Manufacturers Association (JPMA) provides a detailed
analysis of sales values and production quantities of biopharmaceuticals in Japan over time (Figures 3 and 4, for details
see ref. 21). As can be seen from these graphs, market growth is driven mostly by antibody drugs.
Fig. 3 Sales volume of biopharmaceuticals in Japan, 2001 - 2016

Fig. 4: Sales volume of biopharmaceuticals in Japan by weight, 2005 - 201626

https://www.jetro.go.jp/ext_images/en/invest/attract/pdf/mr_bio_en201712.pdf
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About 80% of the antibody drugs were produced by Chinese Hamster Ovary cells (CHO).
Recent activities of Japanese companies in the field, based on company press releases, are provided in Table 7. Thissummary provides evidence that Japanese companies are actively attempting to break the dominance of foreigncompanies which yet dominate Japan’s biopharmaceutical market.
Table 7 Recent activities of Japanese companies related to biopharmaceutical production26
Press release ofcompany
2014/4/8
Kyowa Hakko
Kirin
2014/10/30
Kyowa Hakko
Kirin
2015/10/22
Chugai Pharma

2016/6/7
Mitsubishi Gas
Chemical, Nihon
Kayaku2016/8/2
Kyowa Hakko
Kirin
2017/2/17
Zenyaku Kogyo
2017/2/22
Daiichi Sankyo

2016/1/6
TakedaPharmaceuticals
2016/6/7
Fuji Film
2018/9/6
AGC Asahi Glass
2016/12/20
AGC Asahi Glass

2017/3/22
Meiji Seika
Pharma2017/4/18
Fuji Film

Activity

Details

Within Japan
Completion of biopharmaceutical drug Purification facility incorporating a large-scale column and asubstance manufacturing facilities inculture facility (12,000 L culture tank) for recombinant animal
Takasaki plant
cells, the largest class in Japan. Investment: about 6 billion yen
New pharmaceutical building
Can produce many kinds of products such as lyophilizers andcompleted in Takasaki Plant
solutions mainly for biopharmaceuticals. Investment: about 4.6
billion yen
Establishment of a bioantibody drugSix 6,000 L culture vessels are newly established. Seamless
substance production plant in the
production of large-quantity, small-lot varieties of clinical trials
Ukima Plant
for late-stage development and early-stage commercial biodrugs. Total investment: about 37.2 billion yen
Establishment of Kartivex, an antibody Joint venture for domestic production of antibody drugs
drug manufacturing company
including biosimilars. Will operate production facilities for
antibody drugs within two years
Completed biopharmaceutical drug
Facility for cultivating recombinant animal cells, the largest
substance manufacturing building inclass in Japan (12,000 L cell reactors). Investment about 7.1
Takasaki plantbillion yen
Joined the Next-Generation
Will promote business of next-generation biopharmaceutical
Biopharmaceutical Manufacturing
manufacturing technology
Research Association
Invests 40 billion yen in
Full-scale production of antibody-drug complex (ADC) in whichbiopharmaceutical production,an anticancer drug is fused to an antibody
expands three domestic plants
outside Japan
Acquisition of a biopharmaceutical
Acquired a biopharmaceutical manufacturing facility located in
manufacturing facility in the United
Minnesota from Baxalta US Inc. Used as a manufacturing
Statesfacility for vedolizumab and other bio-products
Increase of production capacity for
Takes advantage 20,000 L culture facility for microorganisms
biopharmaceuticals contract
owned by Merck US, located in Ireland. Investment $ 60 million
manufacturing
Acquired German biopharmaceutical
Development and manufacturing service of biopharmaceuticals
manufacturing company Biomeva
using a microbial expression system
Acquired CMC Biologics, a US/Danish
CDMO using animal cells and microorganisms. Covers drug
CDMO
development and commercial drug product development,
scale-up and commercial manufacturing. Acquired all sharesfor about 60 billion yen
Establishment of antibody drug
Establish commercial-scale antibody drug manufacturing andmanufacturing process at DM Bio instart contract manufacturing (CMO) service of
Korea. Start of CMO service ofbiopharmaceuticals
biopharmaceuticals
Expand biopharmaceutical
Enhance US-based biopharmaceutical production capacity:
development and manufacturing
introduce three 2,000 L animal cell culture tanks (expansion tocontract businessa maximum of 12). Production and development bases in the
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2017/5/9
KanekaNew Belgium facility quadruples
biopharmaceutical production capacity

2017/5/22
JSR

Expanded biopharmaceuticalmanufacturing facilities in the US

2017/9/25
AGC Asahi Glass

Subsidiary CMC Biologics in Denmark
to increase biopharmaceuticalproduction capacity
Expanded process development andproduction facilities for antibody drugs
at US and UK bases

2017/11/6
Fuji Film

2018/3/6
AGC Asahi Glass

Augmented biopharmaceutical culture
capabilities of AGC Biologics (US)2018/3/7
JSR

KBI Biopharma Inc. (US)United Kingdom will also be expanded. Total investment: about
14 billion yen
New large-scale manufacturing facility including a 2,200-literlarge-scale culture tank for contract manufacturing. Capital
investment: approximately 5 billion yen
At KBI Biopharma, Inc., a consolidated subsidiary, two animal
cell culture facilities (2000 L bioreactors) and one microbial
culture facility (300 L) added. Investment: about 30 million USD
Five single-use 2,000-liter animal cell culture tanks were added.
Supports a wide range of culture sizes from existing 2,000 liters
to up to 12,000 liters
Three more single-use 2,000 L animal cell culture tanks wereintroduced at the US base, investment approximately 2.2
billion yen. Expanded production process development bases
and facilities in the United Kingdom: investment approximately
1 billion yen
Introduction of a new single-use culture vessel of 2,000 L.
Covers a wide range of phase II requests, prompt response toscale-up and production
Concluded co-marketing agreement on outsourcing of
biopharmaceutical development and manufacturing (CDMO)
services in JapanOn the initiative of the Japan Bioindustry Association JBA, companies, universities and public research institutes
established in 2013 a “Manufacturing Technology Association of Biologics”27 which presently comprises 32 companies
and startups, 4 national universities and several public research institutes. It aims to help members upgrade advanced
manufacturing technologies for biopharmaceuticals in order to become internationally competitive. Companies suchas Daiichi Sankyo, JNC, Asahi Kasei, Kaneka, Toray and Takara Bio are members, but also equipment manufacturers
like Able, Hitachi, Yokogawa or Shimadzu.

4.9 Biosimilars
Biosimilars are the generic versions of biopharmaceuticals28. In order to keep health-related costs under control, thedevelopment of biosimilars and of generics, is strongly supported by governments all over the world, and also by theJapanese government (Figure 5). JETRO expects that the market of biosimilars will show strong growth over the next
years27 and JPMA estimates the sales of biosimilars in Japan at 18.4 billion Yen ($170 million) in 201626.

27
28

http://cho-mab.or.jp
https://www.pfizerbiosimilars.com/node/37
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Fig. 5: Number of approved biosimilars in the USA, Japan and the EU26

As shown in Table 8, at present 15 biosimilars have been approved for manufacturing and sales in Japan.
Table 8: Approved biosimilars in Japan
Company

Name of biosimilar

SandozJCR Pharma
MochidaPharmaceuticals
Fuji Pharma
Teva
Nippon Kayaku
SandozEli Lilly
Nippon Kayaku

Somatropin BS
Epoetin Alfa BS
Filgrastim BS

Fujifilm Pharma
Sandoz/Kyowa
Hakko Kirin
Kyowa Hakko Kirin

Insulin glargine BS
Rituximab BS

Daiichi Sankyo
MochidaPharmaceuticals
Lupin/YL Biologics

Trastuzumab BS
Etanercept BS

Filgrastim BS
Filgrastim BS
Filgrastim BS
Filgrastim BS
Insulin glargine BS
Infliximab BS

Darbepoetin alfa BS

Etanercept BS

Reference product/genericname
Human growth hormone
Epoetin kappa
Filgrastim/G-CSF

original
registration
1987
1990
1992

approved in
Japan
2009
2010
2012

Filgrastim/G-CSF
Filgrastim/G-CSF
Filgrastim/G-CSF
Filgrastim/G-CSF
Lantus/Insulin glargine
Infliximab/Remicade, TNFa
antibody
Lantus/Insulin glargine
Rituximab, CD20 antibody

1992
1992
1992
1992
2003
2002

2012
2013
2014
2014
2014
2014

2003
2001

2016
2016

Darbepoetin alfa, engineered
EPO
Trastuzumab/Herceptin
Etanercept/TNFR2/p75 fusion
proteinEtanercept/ TNFR2/p75 fusion
protein

2001

2018

1998
2000

2018
2018

2000

2019

According to the survey by JPMA26, there were 144 biosimilars in clinical development or pre-application stages inearly 2018, and another 176 biosimilars in the preclinical stage. On the other hand, the development of 290
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biosimilars was discontinued, showing the difficulty of developing biosimilars such as proof of their “bioequivalence”. Table 9 provides examples for specific products.
Table 9: Status of biosimilar development in Japan, early 20184.10 Cell products
In 2012, Shinya Yamanaka, a researcher at Kyoto University, received the Nobel Prize for Medicine for a method inwhich cells taken from human skin can be transformed in the laboratory into organ-typical cells of the heart muscle,eye or liver in order to heal aging and degenerated organs 29. This discovery has led Japan to a national focus on
regenerative medicine 30 (Figure 6) with strong impact on the pharmaceutical industry: out of 43 clinical trials
registered in May 2018, 25 were initiated by companies, and three cell products had already been approved. Apartfrom pharmaceutical firms, medical technology companies such as Terumo, and camera manufacturers such as Fujifilm,
Nikon and Konika-Minolta, have entered this new field as they are under pressure due to disruptive innovations intheir traditional market segments.

29

30

Rolf Schmid: Stammzelltechnik: Japans systematischer Ansatz, Nachrichten aus der Chemie, Mai 2018https://www.jetro.go.jp/ext_images/australia/JVBFPresentations/FIRM.pdf
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Fig. 6 Market Forecast of METI for Regenerative Medicine31

A pertinent R&D organisation, the Forum for Innovative Regenerative Medicine (FIRM)31, has more than 150 member
companies working together on R&D, standardisation and safety. The Japanese government is supporting thesedevelopments with research initiatives and has created guidelines and regulatory measures since 2014 to accelerateclinical testing and market introduction of cell products (Figure 7).
Fig. 7 Survey of guidelines for R&D on regenerative medicines30

31

https://firm.or.jp/en/about3
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4.11 Genomic medicine and gene therapy
Another important direction of biomedical innovation is in genomic medicine (other term: personalised medicine). It
involves using genomic information about an individual as part of clinical care (e.g. for diagnostic or therapeutic
decision-making). Already, genomic medicine is making an impact in the fields of oncology, pharmacology, rare andundiagnosed diseases, and infectious diseases32.
In Japan, the Tohoku Medical Megabank Organization33 which was established after the Great Western Earthquake in2011 collects genomic and post-genomic data from 70,000 individuals and their blood relatives, provided they
represent at least three generations. The data are used to determine markers for hereditary, genetically codeddiseases as well as genetic criteria for the individual tolerance of drugs and foods.
Japan is also among the global leaders of R&D on gene therapy34. Several Japanese companies who develop genetherapies for the treatment of diseases are presented in Table 10.
Table 10: Some Japanese companies involved in R&D on gene therapy
Company
Anges MD35
Takara Bio36

Gene Therapy ResearchInstitution37

Astellas38
Bonac39

topics Gene medicine for the treatment of critical limb ischemia
 NF-kappaB decoy oligonucleotide for suppression of inflammation
 Oncolytic virus HF10 for co-treatment of unresectable malignant melanoma
 Antigen-specific transgenic T-lymphocytes
 Retro-nectin therapy of lymphocytes
Adeno-associated virus (AAV)-based treatment of Parkinson’s disease
 Amyotrophic lateral sclerosis (ALS) Aromatic amino acid decarboxylase deficiency (ADCC), and Alzheimer’s disease
AAV-based therapy of rhodopsin diseases“Bonac RNA” as a stable form of RNA

5 Market access
5.1 Categories of pharmaceutical and biopharmaceutical products
The Japanese pharmaceutical market distinguishes three categories of products, for which different approval and salesconditions apply: prescription drugs, non-prescription drugs (OTC) and quasi drugs (e.g. ointments) (Table 11).

32

https://www.genome.gov/health/Genomics-and-Medicine
https://www.megabank.tohoku.ac.jp/english/
34
EU-Japan Centre’s report on “Update on cell technology, cell therapy, tissue engineering and gene therapy in Japan”, March201735https://www.anges.co.jp/en/36
http://www.takara-bio.com
37
http://www.genetherapy-ri.com
38
https://www.astellas.com
39
http://www.bonac.com/global/en/
33

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Prescription drugs make up over 90% of the Japanese pharmaceutical market. While the market as a whole isstagnating, the share of generics is growing.
Table 11: Categories of pharmaceutical products
Category
Approval procedure
Sale (see section 5.10)
Prescription-only
medicines  Standard authorisation
No online sales(over 90%), including allprocedures
biopharmaceuticals and about  Generic medicines subject to
60% generic drugs/biosimilars
special prescription rules(see section 5.6)
Non-prescription drugs (overSpecial case: "switch drugs"*
May only be sold after advice fromthe-counter/OTC drugs)
the pharmacist, but also online*weaker drugs that showed no unexpected side effects three years after market launch;
before sale, a pharmacist must give personal advice ("patient must be informed").
Class 1 (contain highly active substances)Class 2 (moderate risks and side effects; examples: cough medicine, painkillers)Class 3 (low risks and side effects; example: vitamins). Advice from the pharmacist is recommended.

5.2 The Pharmaceutical Affairs Law and the Pharmaceutical and Medical Devices Agency(PMDA)The Pharmaceutical Affairs Law contains all relevant rules and regulations for domestic and foreign companies seeking
a license to manufacture and sell pharmaceutical products. First adopted in 1943, the current version came into force
on 25 November 2014. The Ministry of Health, Labour and Welfare (MHLW) is the responsible ministry.
The approval of pharmaceutical products is carried out by the Pharmaceutical Affairs and Food Council (PAFC) of the
MHLW. The regulatory authority is the Pharmaceutical and Medical Devices Agency (PMDA)40. It controls the efficacy,
safety and quality of pharmaceutical products in advance. This term covers not only medicines, but also medical aids("quasi drugs", for example ointments), cosmetics, medical devices and regenerative medical products. The core tasksof PMDA are: inspection, safety precautions and compensation (Figure 8).
Fig. 8: Tasks of the Pharmaceutical andMedical Devices Agency (PMDA)41

40
41

https://www.pmda.go.jp/files/000218744.pdf
https://www.pacificbridgemedical.com/wp-content/uploads/2015/04/Japan-Drug-Regulatory-Overview-2014.pdf
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Inspection: The PMDA conducts the regulatory review for approval and checks whether a manufacturing plant
produces according to international standards (Good Manufacturing Practice, GMP). It advises on clinical studies,
reviews participating clinics (Good Clinical Practice, GCP) and finally examines the documents submitted by the
manufacturer for a manufacturing and sales permit by the MHLW.
Safety precautions: The PMDA systematically collects safety information on adverse drug reactions and stores it in a
Medical Information Database. To this end, it requires companies to implement Good Post-Marketing Study Practice(GPSP) and Good Pharmacovigilance Practice (GVP). Using the Medical Information Database Network MID-NET, it
analyses anonymous patient data in order to predict security problems. Doctors and pharmacists receive up-to-datesafety information via a free e-mail information service.
Compensation: As a consequence of court rulings on thalidomide and quinoform disease with nearly 7,000 cases inJapan alone, the government established the Fund for Relief Services for Adverse Drug Reactions in 1979, which isinvested by industry and government grants. Since 1979, the fund has provided more than $18 million in compensation
for adverse drug reactions (as of 2015). Since 2004, the Relief Fund has also covered benefits for infections caused bytaking biological drugs - a consequence of the BSE scandal. Since 2014, the benefits catalogue has also included
compensation for undesired side effects of regenerative medical products42.
A particular feature of PMDA is that the agency has set up a profound consultation system, which provides advice toapplicants at all levels of the regulatory process43.

5.3 Authorisation requirements for marketing
Every domestic and foreign company marketing a pharmaceutical or biopharmaceutical product in Japan must be
registered with the PMDA as a "Marketing Authorisation Holder" (MAH) 44. Foreign companies without their own
branch in Japan can appoint a Japanese MAH for this purpose. In the application for approval, a competent partnerwith Japanese knowledge must be named who will conduct the negotiations with the PMDA and, after market
approval, assume responsibility for the reliability of the applicant and his data material45. More than forty Contract
Research Organisations (CROs) are available for such services; they are organised in the Japan CRO Association 46.
Reliability testing includes Good Quality Practice (GQP), quality assurance, Good Vigilance Practice (GVP) sales
assurance and Good Vigilance Practice (GVP) safety management47.
The PMDA distinguishes between prescription (MAH type 1) and non-prescription (MAH type 2) drugs, and, in the caseof foreign applicants, whether the registration is for biological or radioactive preparations, for non-sterile or sterile
drugs, or only for the packaging, labelling or storage of pharmaceutical products. Each company needs only one MAH
license. This is limited to five years. An application costs approximately $1,300 and takes 35 days to process (see ref.
26). PMDA offers a comprehensive personal consulting service for the approval of pharmaceutical products. This leads
to short approval periods, and innovative products are ahead of the field48.

42

https://www.pmda.go.jp/files/000214750.pdf
https://www.pmda.go.jp/files/000157641.pdf
44
https://www.pmda.go.jp/english/review-services/reviews/foreign-mfr/0001.html
45
https://www.pmda.go.jp/files/000163838.pdf
46
https://www.google.com/search?client=safari&rls=en&q=japan+cro+association&ie=UTF-8&oe=UTF-8
47
https://www.pmda.go.jp/files/000204341.pdf
48
https://ec.europa.eu/futurium/en/system/files/ged/future_plan_of_pmda_japan.pdf
43

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5.4 Authorisation requirements for manufacturing
Foreign manufacturers of active pharmaceutical ingredients, including biopharmaceuticals (APIs) must register inJapan and obtain a letter of access from a Marketing Authorization Holder (MAH) 49 . In the application, themanufacturer must name an expert advisor based in Japan, who is responsible for all discussions with the authority(in Japanese language); direct contact with the PMDA is not possible.
In the case of manufacturing companies abroad, the PMDA grants this licence (Foreign Manufacturer Registration,
FMR) for a period of five years, usually after document examination; often, however, an inspector from the PMDA alsoarrives for an GMP audit (expert interpreters recommended!). Such GMP audit covers all production sites describedin the application for approval 50 . In the case of prescription drugs, the facilities for the manufacture of active
substances, intermediate products, packaging, labelling and storage as well as external testing and inspection bodies
are also audited.
An FMR license costs approximately $1,400 for document review and is limited to five years. The official processing
time is five months, but partial change approval applications can also take two years. If a foreign company wants toregister a masterfile, it needs a letter of access from an MAH. For certified master files, PMDA only publishes global
information. The most common problems for granting an FMR license are changes in manufacturing conditions,deficiencies in the agreement of technical conditions and change controls (QVP), and insufficient minimum
requirements for biological raw materials and retention periods. This also applies to the manufacturing of
biopharmaceuticals.
If a European company concludes a license deal or a development contract with an MAH that has already been licensed,
the MAH may also take over the approval of the product by PMDA. The MAH can be both Japanese or international
companies. Sales partnerships often follow the pattern of co-promotion, in which lower transfer prices are accepted
in return for a sales monopoly in Japan. Technical partnerships are the rule for foreign start-ups. In this case, thepartner in Japan assumes responsibility for creating all the prerequisites for market approval and for manufacturing
the product within the framework of a license and development agreement.

5.5 Regulatory review and clinical trials
Thanks to the work of the International Council for Harmonization of Technical Requirements for Pharmaceuticals for
Human Use (ICH)51, the PIC/S and other agreements, the Japanese rules of the regulatory review already comply with
US and European standards in many areas (Figure 9).

49

https://www.pmda.go.jp/english/review-services/reviews/foreign-mfr/0001.html
https://www.jetro.go.jp/ext_images/brazil/topics/20140806962-topics/Sessao4-2_Tawaragi.pdf
51
http://www.ich.org/home.html
50

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Fig. 9 General scheme for registration of a drug or API

At the heart of the system is the Common Technical Document (CTD). It contains all quality, safety and efficacy
information. Out of its five modules, only module 1 is Japan-specific - for example, it must contain a draft package
insert in Japanese. Clinical trials are governed by country-specific Good Clinical Practice (J-GCP) standards. These
contain additional requirements compared to the international standards (ICH-GCP), such as a site-specificinstitutional review board (IRB). International clinical trials are in vogue for new active substances aimed atinternational markets. They have larger patient populations and often achieve results more quickly52. More than 40
Japanese Site Management Organisations (SMOs) offer consulting services here 53 . PMDA also offers individual
consultations in Japanese before each new phase of the regulatory review and clinical trials begins. Depending on theapproval phase and drug type, the fees range between approximately $18,000 and $54,000.
Biological products require special attention due to infection risks. Many of the ICH regulations for biotechnologicallymanufactured drugs have already been incorporated into the Pharmaceutical Affairs Law, for example the Q5A
guideline for testing for the absence of viruses. The manufacture of cellular drugs requires ministerial approval. For
clinical trials with recombinant and gene therapy products, the Cartagena Protocol applies to the strictly controlled
release of genetically modified material. Here too, special permits are required54. Cell products are biological products
from processed human or animal cells or tissues intended for the reconstruction or repair of structures or functionsof the human body (regenerative medicine). Their development to market maturity is particularly promoted, forexample through accelerated testing procedures and provisional approvals (see section 5.8).

52

http://www.mhlw.go.jp/file/04-Houdouhappyou-11123000-Iyakushokuhinkyoku-Shinsakanrika/GCPclinicaltrials.pdf
http://jasmo.org
54
https://www.biodic.go.jp/bch/english/cartagena/images/e_cartagena.pdf
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5.6 Approval criteria for generics
In order to control the cost of the healthcare system, the government plans that, by 2020, sales of generic products
should account for 80% of all drugs (value-based). This includes sales of biosimilars.
Approval criteria for generics are GMP-compliant manufacturing processes,
 conformity to Japanese standard specifications including standards and test methods used, good stability data from accelerated tests (stability of three samples over six months at 40 oC (±1) and 75%(±5%) relative humidity), good absorption, distribution, metabolism and excretion (ADME) data for bioequivalence assessment.
They can be approved without clinical testing, if efficacy and safety are demonstrated in other ways55. However, if nodata obtained on Japanese are available, such studies may be extensive in practice.
On average, 20% of all applications are rejected. The approval period is approximately 12 months for new applications
and 6 - 12 months for changes on existing applications (see ref. 26).
For biopharmaceutical generics (biosimilars), special rules of MHLW to ensure bio-equivalence apply56. Details can be
retrieved from the website of the Japan Generics Medicine Association (JGA)57.

5.7 Orphan drugs
Orphan drugs are active pharmaceutical ingredients for severe or chronic diseases for which there is no drug or medical
treatment and which affect less than 50,000 people, in the case of chronic diseases less than 180,000 people. Orphan
drugs are expected to be significantly effective and safe. For such drugs, the Japanese government offers priority
advice from the PMDA, priority checks, tax relief, government grants and exclusive marketing periods58.

5.8 Innovative products and bio-products: the forerunner (“Sakigake”) procedure
The Japanese government has recently emphasized the aim to accelerate the approval of innovative drugs, roughly
corresponding to the American "first-in-class" label. If a pharmaceutical product, including a biopharmaceutical, meetsa therapeutic gap, shows high efficacy and safety in initial clinical studies and was first developed in Japan, it can be
rated "innovative" through consultations with the PMDA59. In such case, accelerated regulatory reviews are carriedout according to the so-called Sakigake procedure, leading to provisional approval (Figure 10). Such approval isconditional and limited in time, pharmacovigilance is subject to stricter rules, and a final evaluation of the productmust be carried out after seven years at the latest.

55

https://www.pmda.go.jp/files/000221883.pdf
https://www.jga.gr.jp/library/old/www.jga.gr.jp/english/wp-content/uploads/sites/4/2015/03/Interim-Translation1.pdf
57
https://www.jga.gr.jp/english/country-overview/biosimilar-products.html
58
https://www.pacificbridgemedical.com/publication/japan-orphan-drug-update-2017/59
http://www.mhlw.go.jp/english/policy/health-medical/pharmaceuticals/dl/140729-01-02.pdf
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Fig. 10 Expedited approval system for innovative drugs60

5.9 Pricing
The pricing of medicines is carried out by the National Health Insurance (NHI) and published by the MHLW. The NHI
establishes a price list four times a year, which has been drawn up by a committee (中医協 Chuikyo, Central Social
Insurance Medical Council) and is binding for hospitals and pharmacies60. The prices for medicines are set by theJapanese government. Innovative products, especially biologics, have an advantage. State pricing includes: the provencosts of the manufacturer, "daily price equivalents" for domestic and foreign reference products (if available),
discounts for high sales ("huge-seller repricing rule"), but also the degree of innovation (first-in-class labelling), which
can lead to price premiums of more than 100% according to Sakigake rules for particularly eligible products such asorphan drugs, medicines for paediatrics or pharmaceuticals developed on behalf of the state61. Biologics, especiallybiosimilars, have an advantage here - Japan still needs to catch up by international standards. However, the market
volume for drugs as a whole is likely to stabilise due to the declining population and ever stricter price controls. The
prices of generic products such as biosimilars are being curbed particularly sharply.

60
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https://www.pacificbridgemedical.com/wp-content/uploads/2015/04/Japan-Drug-Regulatory-Overview-2014.pdf
https://www.pmda.go.jp/files/000221888.pdf
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For biosimilars, the fixed price is 60% to 70% of the original. As already mentioned, the government, through NHI,
wants to achieve that 80% or more (in value) of all pharmaceuticals prescribed by doctors are generic by 2020 at thelatest; by September 2017 their share was already 66%62, so the country is on course. The switch from branded drugs
to generics reduced health care costs already by an estimated $12 billion in fiscal year 2017. This trend is reinforced
by Japan's growing trade relations with the ASEAN countries and above all with India, a leading manufacturer ofgenerics.

5.10 Marketing and sales
The distribution channel for pharmaceutical and biopharmaceutical products in Japan is short. Almost all medicines
are delivered by only four wholesalers and their regional distributors63 (Table 12). As a consequence, there are hardly
any bottlenecks, control is high and there are practically no counterfeit products.
Table 12 Four pharmaceutical wholesalers dominating distribution
Company net sales FY 2017
Medipal Holdings
Alfresa Holdings Corp
Suzuken Co. Ltd.
Toho Holdings
Total($ billion)
29.6
24.9
20.0
11.9
86.4

The wholesalers supply hospitals, private clinics and pharmacies up to twice a day and employ around 30,000
marketing specialists as medical consultants. Direct sales bypassing these wholesalers usually fail due to lack of spacein pharmacies.
The most important target group for pharmaceutical and biopharmaceutical marketing is not patients, but doctors
and pharmacists. The Japanese are characterised by a high level of brand loyalty when it comes to pharmaceuticals.
Doctors and pharmacists therefore play a decisive role in the marketing of a new medicine, because 90% of all
pharmaceutical products sold in Japan are subject to prescription, and even for over-the-counter medicines the laws
provide for expert advice on effects and side effects. Doctors often prefer sponsored branded products. They may
charge a premium of up to 25% on the government-fixed selling price ("medical margin")64.
In Japan, prescription drugs cannot be ordered over the Internet. The sale of more than 11,000 over-the-counter (OTC)
medicines, on the other hand, is available online, but not without information from both the patient and the retailer:
OTC type 1 requires a pharmacist to explain the product, type 2 requires a pharmacist or qualified salesperson toprovide advice, and even the online sale of type 3 products requires the patient to be available for queries65. As ageneral rule, prescription medicines cannot be sold on the Internet in Japan, and no licensed Japanese pharmacy ispermitted to sell prescription drugs online or to market unapproved drugs via the internet.

62

https://www.pacificbridgemedical.com/news-brief/japan-expands-share-of-generic-drugs/
http://www.ial-japan.com/PA-Aug.29,2013.pdf
64
https://www.eubusinessinjapan.eu/sectors/healthcare-medical/pharmaceuticals
65
https://www.pmda.go.jp/files/000152069.pdf
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Digital marketing, on the other hand, is on the increase. Public advertising is only permitted for non-prescription
medicines. Doctors are therefore a preferred target group for new prescription drugs. According to studies by theJapanese pharmaceutical industry, 85% of them use specialist information from the Internet and now spend up to 20%of their business hours doing so. The pharmaceutical industry is responding with electronic product advertising (edetailing). Consultation portals for doctors such as MedPeer, Carenet or m3 offer assistance. Interestingly, however,the desire for personal consultation by physician visitors is not diminishing - in 2013, Japan's 308,000 physicians wereserved by 66,000 of these "marketing specialists"66.

5.11 Postmarketing and Good Vigilance Practice (GVP)The Japanese Pharmaceutical Affairs Law supports a fairly rapid market launch of products, but emphasises the
manufacturer's responsibility after market entry even more strongly than the European law67. With the recommended
Good Post-Marketing Study Practice (GPSP) and the binding Good Vigilance Practice (GVP), a Marketing Authorization
Holder (MAH) must permanently collect information about their pharmaceutical or biopharmaceutical product,
including information from the Internet. They must point out undesirable events and countermeasures and, if
necessary, carry out a reassessment. Depending on the type of drug, there are different GMP requirements, forexample for standard operating procedures (SOPs), safety information and training. Only some of these responsibilities
can be delegated to third parties. All data records must be archived for at least 10 years, in special cases up to 30 years.
Since 2018, such data flow into the Medical Information Database (MID-NET) of JDMA, a nationwide surveillance
network of 23 hospitals and 10 other medical centres68 (Figure 11).
Figure 11: MID-NET, Japans medical information system for pharma vigilance69

66

https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Life-Sciences-Health-Care/gx-lshc-2015-life-sciencesreport-japan.pdf
67
https://www.pmda.go.jp/files/000218744.pdf
68https://www.fda.gov/media/107784/download
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Since July 2018, suppliers of pharmaceutical or biopharmaceutical products, which have already been approved inJapan, are expected to include information from MID-NET for up to 10 years in their safety assessment and to conduct
new clinical studies if any side effects are observed. In this context, risk groups, such as older people, pregnant women,children, etc. must be given special consideration.

6 Cultural business practice
The Japanese are a homogeneous, closely networked community. 125 million people live in the limited settlement
area of the Japanese islands, two thirds of them in five metropolitan regions. More than 98% are ethnic Japanese,characterised by a respectful conduct in a confined space, a unique culture with 2,000 years of history and constantchallenges posed by nature, such as volcanic eruptions, typhoons, earthquakes and tsunamis. These experiences andthe island's isolation over centuries have given rise to a personality type with its own culture of interaction andbusiness. Japanese society is largely built on 系列 keiretsu, informal business groups with interlocking business
relationships, and 義理 giri, mutual dependence through obligations and duty. Networks also permeate the Japanese
economy like a spider web. 99.7% of all Japanese companies are SMEs with less than 300 employees, but often partof manufacturing networks of world-famous companies, such as Toyota, NEC, Fujifilm or Takeda, or of trading houses,
such as Mitsubishi, Mitsui or Sumitomo.
Not only personal networks, but also long traditions shape the Japanese business world. The history of the trading
house Sumitomo goes back to 1630, and many companies have been family-owned for more than a hundred years.
They see themselves as a community of interests between owners, family members, employees, suppliers andcustomers. If there is no suitable successor in the company, it is better to "adopt" a non-family member rather thansell to a non-Japanese owner: that would not only be entrepreneurial failure, but an abandonment of Japanesetraditions.
In view of these characteristics, which translate into the specificities in the Japanese regulatory practice, including therequirement to complete many steps in Japanese language, SMEs or start-ups who want to do enter the Japanesemarket are strongly advised to contract with a CRO or SMO. There are over 70 CRO/SMOs in Japan supporting new

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foreign players in carrying out the necessary clinical trials and approval procedures, as shown in a recent shortlist of
JETRO reproduced in Fig. 12.
Fig. 12 CROs or SMOs and their services for entry into the Japanese market25

7 Opportunities and access points
7.1 General remarks
The Japanese market is large, highly regulated and far away in a different culture. Large European life science
companies, such as Aventis, Bayer, Glaxo-Smith-Kline or L’Oréal deploy considerable investments to be successful inthis market. SMEs and start-ups have less resources and thus should consider the following options:
Variant 1: Import, approval, market launch by own efforts
Variant 2: Contract production by a manufacturer in Japan, approval, market launch by own efforts
Variant 3: Production in Europe, sales partnership in Japan
Variant 4: Technical production and sales partnership with companies in Japan
Variants 1 and 2 mean a very high expenditure of time, organisation and money, not only for registration, but also formarketing and sales. SMEs should therefore carefully examine if they are able to bear such expenditure. Most likely,
variant 3 is better suited for European SMEs, and variant 4 for start-ups.

7.2 Access points
The Japanese pharmaceutical market offers European SMEs and start-ups a considerable number of entry
opportunities, particularly in the field of innovative biopharmaceuticals, which have a unique selling proposition. It isa mature market with particularly demanding customers and many established suppliers. In order to examine themarket niche, which might be reached with a new product, it is proposed to network at trade fairs with strong Japaneseparticipation (e. g., BIO International Convention, BIO-Europe) or even better at Japanese trade fairs, such as BioJapanand CPhI - preferably with documents about one’s product or service in Japanese translation.
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For market access and marketing, country-specific rules must be observed, which can hardly be mastered without the
support of Japanese partners. Although the regulations are clear and the procedures well structured, communication
with Japanese authorities such as the PMDA are a major hurdle; many documents and discussions during advisory
meetings require a very good knowledge of spoken and written Japanese language. Cooperation with a Japanese
consulting firm is therefore indispensable and is also favoured by the Japanese side, as shown in a graph by JETRO(Figure 13). Such kind of services are offered by more than 70 CROs and SMOs, including international companies.
They can effectively advise on consensus building with PMDA, NHI, or sales and marketing experts.
Figure 13: Partnerships for sales of biopharmaceuticals in Japan (see ref. 20)

7.3 PMDA’ consulting services are indispensable
PMDA offers consulting services throughout the entire approval process as well. These are not free of charge, but are
indispensable. PMDA evaluates documents and provides advice on the adequacy of study design and protocols before
starting clinical trials. As an example, if the tests for a CTDs are conducted according to ICH and PIC/S guidelines,
English files may be submitted for Modules 3, 4 and 5 (although the table of contents should be in Japanese)69, but
modules 1 and 2 require a Japanese translation, whereas English is accepted for figures and tables. If there are only
minor differences between non-Japanese and Japanese in the pharmacodynamic investigations in Module 3, the sizeof the clinical trial in Japan can be significantly reduced and, after consultation with PMDA, data collected ininternational clinical trials can be used. For clinical trials in Japan, a government-licensed clinic may be preferable as it
is already experienced in conducting clinical trials; there might be fewer deviations from standard protocols, making
the study duration shorter and lowering the costs.

7.4 Further recommendations to SMEso

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The National Health Insurance (NHI) sets prices for all pharmaceutical products several times a year, taking into
account the life cycle of a drug with annual price reductions. Even if there is no drug similar to your product inhttps://www.pacificbridgemedical.com/wp-content/uploads/2015/04/Japan-Drug-Regulatory-Overview-2014.pdf
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Japan yet, this may be the case at the time of approval. Then there would already be an NHI price standard andthe launch price of your product would be set at that price. Thus, check to see if any competing products are being
developed. Are you working on a particularly innovative compound according to a first-in-class FDA definition, arare disease compound or a paediatric drug? Then you can negotiate price surcharges70.
oConsider carefully whether you can shoulder the great expense of registering your pharmaceutical productyourself as a foreign company. Consider also the high costs for sales and marketing: doctors and medical
representatives are not only to be convinced of the medical, but also of the economic advantages of your product.
SMEs rarely have the capital they need to register a new active ingredient in Japan on their own. It is much easier
to work with a Japanese pharmaceutical company. All international and large Japanese pharmaceutical companies
analyse interesting drug candidates worldwide and maintain licensing offices. Some of them have specialised inlicensing business from abroad, for example the Sumitomo subsidiary Summit with European offices in Düsseldorf,
London, Milan and Madrid71. For European SMEs that are already in the approval process for a new molecular
entity (NME) with EMA or FDA, an exclusive licensing agreement for the Japanese market may offer significant
advantages.

oTakeovers are also not uncommon: leading Japanese pharmaceutical companies do corporate venture
investments and are constantly expanding their strategic portfolio, also in Europe (in 2016, Japanese companies
took over 156 European companies, 41 of them in Great Britain and 26 in France)72.

o

The large Internationals in pharma all hold market approvals (MAH) for drugs in Japan and cooperate in many
ways with the Japanese pharmaceutical industry. Some have Japanese subsidiaries, such as MSD (Banyu
Pharmaceuticals) or Roche (Chugai Pharma). Bayer, Boehringer-Ingelheim, Sanofi and others operate laboratories
and innovation networks in Japan. If your pharmaceutical product or service addresses an interesting market niche
in Japan, cooperation with an International with a presence in the Japanese market can also be promising.

oManufacturers of biosimilars might want to check if their innovative product fits into the portfolio of generic drug
manufacturers from emerging markets exporting to Japan. Indian manufacturers, for example, have successfully
established themselves in Japan's pharmaceutical market - either as suppliers or by acquiring Japanesecompanies73.

oTake part in international trade fairs such as BIO-Europe, BIO International Convention or BioJapan, and you will
have a good opportunity to talk to licence scouts from Japanese and international pharmaceutical companies.

o

If you are an SME or start-up, the EU-Japan Centre for Industrial Cooperation in Brussels organises every year its“biotech cluster SME mission”74.

o

If you are a start-up in the life sciences field, the GoGlobal programmes of the European Institute of Technology(EIT) offer support to introduce your product or service to the Japanese market. The programme is operated by
BioM Biotech Cluster Development, a public scouting and partnering agency in Munich, Germany75.

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https://www.mhlw.go.jp/content/11123000/000335149.pdf
http://www.summitpharma.co.jp/english/about/network.html
72
Nikkei Asia Review, April 20177173

https://www.manufacturingchemist.com/news/article_page/Indian_generic_manufacturers_aim_to_enter_the_Japanese_market/114151
74
https://www.eu-japan.eu/events/biotech-cluster-sme-mission
75
https://www.bio-m.org/start.smart.global/; https://www.bio-m.org/startsmartjapan
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8 Actors, clusters, fairs
8.1 in Japan
Pharmaceuticals and Medical Devices Agency PMDA
独立行政法人医薬品医療機器総合機構 Dokuritsugyōsei hōjin iyakuhin'iryōkikisōgōkikō is Japan's regulatory bodyunder the Ministry of Health MHLW. It is responsible for protecting public health by ensuring the safety, efficacy andquality of medicines and medical devices. It conducts scientific reviews of marketing applications for drugs and medical
devices and monitors their safety after approval. It is also responsible for providing compensation to patients affectedby adverse drug reactions or infections caused by drugs or biological products.
https://www.pmda.go.jp/english/index.html
Ministry of Health, Labor and Welfare MHLW
厚生労働省 Kōsei-rōdō-shō. The Ministry of Health, Labour and Welfare is responsible for the wide range of areasfrom medicine and long-term care, childcare, pension reform, employment and labour to social affairs. Its budget ofaround 31 trillion yen ($290 billion) in fiscal year 2017 represented almost a third of total national spending.
http://www.mhlw.go.jp/english/
National Health Insurance
国民健康保険 Kokumin-Kenkō-Hoken and the Employee Health Insurances 健康保険 Kenkō-Hoken are the two
mainstays of Japanese health insurance. Joining the national health insurance is compulsory for all Japanese who do
not have an employee health insurance and for all foreigners resident in Japan with visas valid for longer than 3 months.
https://5kuho.com
Japan Agency for Medical Research and Development, AMED
国立研究開発法人日本医療研究開発機構 Kokuritsu kenkyū kaihatsu hōjin Nihon iryō kenkyū kaihatsu kikō wasfounded in 2015. Modelled after the National Institute of Health of the USA, it aims to integrate Japan's basic researchwith practical application, creating the world's most advanced medical technologies and services. As an agency under
the Ministry of Health MHLW, the Ministry of Science MEXT, the Ministry of Industry and Trade METI and chaired by
the Prime Minister, it aims to advance Japan's industry in the field of medicine, pharmaceuticals and medical devices.
https://www.amed.go.jp/en/index.html
Japan Pharmaceutical Manufacturers Association JPMA
日本製薬工業協会 Nihon-seiyaku-kōgyō-kyōkai The Japan Pharmaceutical Manufacturers Association (JPMA) is anassociation of 71 research-based pharmaceutical companies (as of May 2018) and celebrates its 50th anniversary in
2018. Through the development of innovative ethical medicines, it aims to help advance global healthcare andpromote healthy development of the pharmaceutical industry by developing proactive strategies andrecommendations in response to globalisation and improving public understanding of medicines.
http://www.jpma.or.jp/english/
Manufacturing Technology Association of Biologics MAB

次世代バイオ医薬品製造技術研究組合 Jisedai baioiyakuhinseisaku-gijutsu-kenkyu-sougo
An association of some 50 companies, universities and research centres to drive improved manufacturing processes
for biopharmaceuticals.
http://cho-mab.or.jp
Japan Generic Medicines Association JGA

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日本ジェネリック製薬協会 Nihon djeneriku seiyaku kyōkai is an association of MAH (Market Authorization Holders)for generics, and since its foundation in 1965 has contributed to a sustainable supply of generics at affordable prices
and high quality. It is a member of the International Generic and Biosimilar Medicines Association IGBA.
http://www.jga.gr.jp/english.html
Forum for Innovative Regenerative Medicine FIRM
一般社団法人再生医療イノベーションフォーラム Saisei-iryō-Inobēshon-fōram was founded in 2011 by fourteencompanies conducting R&D in the field of regenerative medicine, and in 2017 already had approximately 150 member
companies.
https://firm.or.jp/en/about3
SPI - Summit Pharmaceutical International
is a service company that belongs to the wide network of the trading house Sumitomo and offers contract researchand other services when entering the Japanese market.
http://www.summitpharma.co.jp/english/index.html
Japan External Trade Organisation JETRO
ジェトロ is the foreign trade agency under the Ministry for Economy, Trade and Industry METI. With 74 offices in 54
countries (as of November 2017) and about 1,800 employees, many of whom are temporarily seconded from industrial
companies, it supports trade and investment between Japan and the rest of the world. Originally established tosupport Japanese exports, the focus has shifted to promoting foreign direct investment in Japan and helping small andmedium-sized Japanese companies maximize their global export potential.
https://www.jetro.go.jp/en/
New Energy and Industrial Technology Development Organisation NEDO
国立研究開発法人新エネルギー・産業技術総合開発機構 Kokuritsu kenkyū kaihatsu hōjin shin enerugī sangyō
sangyō gijutsusōgō kaihatsu kikō plays an important role in Japanese economic and industrial policy as project houseof the Ministry for Economy, Trade and Industry METI. It has two main tasks: to address energy and global
environmental problems, and to promote and develop new cutting-edge technologies. NEDO's projects are usually
carried out in cooperation with industrial companies and public research institutions, and are intended to form thebasis for industrial development and technological change in the medium to long term. Amongst other targets, NEDO
supports large projects in medical and cell technology.
http://www.nedo.go.jp/english/index.html
Japan Bioindustry Association JBA
バイオインダストリー協会 Bioindasutori-kyōkai was founded in 1987 and is affiliated with the Ministry for Economy,
Trade and Industry METI. Its more than 200 members include a broad spectrum of companies using biotechnology insectors, such as pharmaceuticals, medical equipment, food and cosmetics, chemicals, information technology,
engineering, construction, and energy and natural resources. In addition, JBA members include public organisations,
universities, public research institutions and a variety of individuals. Since 1999, JBA is organising Japan's leading
annual biotechnology exhibition BioJapan
https://www.jba.or.jp/en/

8.2 in Europe
European Federation of Pharmaceutical Industries and Associations (EFPIA) Japanwas founded in 2002 and, with 24 member companies, is the voice of the research-based European pharmaceuticalindustry in Japan.
https://www.efpia.eu/about-us/efpia-japan/
Start.Smart.Japan and Start.Smart.Global
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are “GoGlobal” initiatives of the European Institute of Innovation and Technology (EIT Health) to initiate business withJapanese partners for small and medium-sized European life science companies.
https://www.bio-m.org/start.smart.global/; https://www.bio-m.org/startsmartjapan

8.3 Pharmaceuticals-related Trade Fairs in Japan
CPhI Japan 2019
March 16 - 18, 2020
Venue: Tokyo Big Sight
https://www.cphi.com/japan/visit/news-and-updates/2020
Medical Japan
October 23 – 25, 2019
Venue: INTEX Osaka
https://www.medical-jpn.jp/en-gb.html
BioJapan 2019
October 9-11, 2019
Venue: Pacifico Yokohama
https://www.ics-expo.jp/biojapan/en/

9 Literature
JETRO Invest Japan: Market Report Biopharmaceuticals and Biosimilars, December 2017https://www.jetro.go.jp/ext_images/en/invest/attract/pdf/mr_bio_en201712.pdf
A short report worth reading in English language about trends in the Japanese biopharmaceutical market, government
support measures and how to gain a foothold.
JETRO Invest Japan: Attractive Sectors - Life Science, July 2016
https://www.jetro.go.jp/ext_images/en/invest/attract/pdf/en_2016_life.pdf
Information in English about the Japanese pharmaceutical market and its future development. The government
strategies for accelerating the approval process are being described.
Pharmaceutical and Medical Devices Agency (PMDA) Review Reports: Drugs
https://www.pmda.go.jp/english/review-services/reviews/approved-information/drugs/0001.html
PMDA, the Japanese regulatory authority, has published numerous presentations and reports in English on theapproval of active pharmaceutical ingredients, import, safeguards and other relevant topics.
Ministry of Health, Labour and Welfare: Update of Drug Pricing System in Japan, November 2016
https://www.pmda.go.jp/files/000221888.pdf
A 40-page presentation in English, which describes the Japanese pricing system for all types of active pharmaceuticalingredients in considerable detail.
EU-Japan Centre for Industrial Cooperation, Keith Jackson: The pharmaceuticals industry in Japan: current trends
and emerging business opportunities for EU-based small- and medium-sized enterprises, March 2018https://www.eubusinessinjapan.eu/sectors/healthcare-medical/pharmaceuticals, registration required.
A comprehensive report on 75 pages in English with over 100 references. The author teaches at the Doshisha Business
School in Kyoto and has compiled extensive material on the structure of the medical market in Japan. However, thereport is somewhat academic and gives little practical guidance.
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Pacific Bridge Medical Inc.: Japan Drug Regulatory Overview 2014
https://www.pacificbridgemedical.com/wp-content/uploads/2015/04/Japan-Drug-Regulatory-Overview-2014.pdf
The company, which is based in Bethesda, Maryland, offers news on the Japanese (and Asian) pharmaceutical markets,
including this detailed report on the approval process of active pharmaceutical ingredients in Japan, which comprises
more than 80 pages and is still largely up to date. Pacific Bridge Medical also offers an online resource centre withvaluable news on Japan's pharmaceutical market.
CPhI Pharma Insights: Japan Report 2018 - a big year for Japanese pharma
https://ubmemeaensoprod.s3.amazonaws.com/CPHI_JAPAN/cphi_pharma_insights_japan-2018-mp-v6.pdf
registration required.
Results of the surveys of visitors of the annual CPhI Pharma fairs in Tokyo,

Hiromoto AKABANE, Institute of Pharmaceutical Industry Policy Research: Challenges for the biopharmaceuticalindustry and recommendations for further development – research paper No. 71 (March 2018)
http://www.jpma.or.jp/opir/research/rs_071/paper_71.pdf
A 79-page study on this topic with many data and summaries, in Japanese language.

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