Japanese pharmaceutical market to be worth US$80bn by 2020, says GlobalData

But increased use of generic drugs will be a key contributor to a forthcoming period of slow growth

Japan’s pharmaceutical market value is set to grow at a tepid Compound Annual Growth Rate (CAGR) of 1.3% from US$72.8bn in 2013 to reach $79.8bn by 2020, driven by new product launches and the healthcare burden of the country’s ageing population, according to research and consulting firm GlobalData.

But the company’s latest report, CountryFocus: Healthcare, Regulatory and Reimbursement Landscape – Japan, states that the Japanese government’s promotion of generic drugs, its biennial pricing review system and the depreciation of the yen against the dollar will be limiting factors in what is the second-largest mature pharmaceutical market in the world by value.

The market was worth $64.2bn in 2008 and peaked at $88bn in 2011, before a slight dip to $87.2bn in 2012. A substantial drop in 2013 saw its value decline by more than $14bn, but GlobalData expects a steady period of recovery to follow.

'Deregulation measures introduced in April 2005 have had an impact on overall market performance and more efficient drug reviews have facilitated the entry of new products,' says Joshua Owide, GlobalData’s Director of Healthcare Industry Dynamics.

'The approval process has now caught up with that outside Japan, as highlighted by two approvals for Bristol-Myers Squibb, the Daklinza (daclatasvir) and Sunvepra (asunaprevir) dual regimen for hepatitis C, and Opdivo (nivolumab) for melanoma, prior to their approval by the US Food and Drug Administration.'

Aside from wider economic factors, such as currency exchange rates, GlobalData says increased use of generic drugs will be a key contributor to the forthcoming period of slow growth to 2020.

Owide continues: 'In 2008, generics accounted for 19% of the pharmaceutical space in terms of volume, rising to 25.2% in 2013. Japan has set a goal for generics to account for 60% of all drug use by 2017.

'To this end, the Ministry of Health, Labour and Welfare announced new price cuts in 2013 for drugs with generic replacement of less than 60%, a move which is likely to limit future growth in the pharmaceutical arena.'

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