Japanese pharma r&d spending slows down
In a reversal of the long-term trend of increasing their r&d spend annually, major domestic pharmaceutical manufacturers in Japan have begun to freeze or even reduce their investment, with genome-related research most affected. The industry is suffering from slow growth in the US market, combined with reductions in government-controlled drug prices and an increase in patients' share of medical costs, making people more cautious about purchasing medicine.
To increase r&d investment efficiency, pharmaceutical firms are rapidly reducing genome-related and other basic research budgets, and emphasising clinical development to hasten commercialisation of new drugs. However, the ratio of r&d spend to sales is in the 10-20% range, significantly higher than in most other industries, and pharma companies consider any further increase in this ratio as potentially damaging to their financial health.
Yamanouchi Pharmaceutical, for example, which had planned to invest ¥10bn (€79.5m) on genome research in each of the five years up to fiscal 2005, is now to spend ¥8bn (€63.6m) annually in the three remaining years of that period. According to President Toichi Takenaka, the human genome project is winding down; meanwhile Yamanouchi's own sequencing technology has reached a certain level of proficiency, so it is cutting back on the amount of data it buys from specialists in the field.
Yamanouchi had planned to invest ¥80bn (€636m) on r&d overall in fiscal 2005, but has reduced that to ¥70bn (€557m) with basic research accounting for only about 30% of the total.
Similarly, Mitsubishi Pharma expects to spend ¥48bn (€382m) on r&d in the current financial year ending 30 March, ¥5bn (€39.8m) less than initially planned, according to President Teruo Kobori. Chairman of Takeda Chemical Industries Masahiko Fujino said his company is cutting its fiscal 2002 r&d spending plans by ¥10bn (€79.5m) to ¥120bn (€55m), although this still represents a ¥20bn (€159m) increase on fiscal 2001.
A spokesman for Sankyo said the company expects to spend ¥86bn (€684m) on r&d in the current business year ; up 6% on fiscal 2001 ; but will begin reducing the amount gradually in fiscal 2003, eventually to just above ¥80bn (€636m). The company's three-year genome research plan finishes in fiscal 2003, and it will then shift funds away from basic research toward clinical trials in Europe and the US.