The value of Japan's pharmaceutical market in 2008 was US$85.8bn. Pharmaceutical sales in Japan are forecast to grow by a modest 1.3% in local currency terms during the 2009-2014 period. This rate of expansion is below the 2004-08 CAGR of 2.38% and underlines the mature nature of the market. Meanwhile, drug market sales in US dollar terms will contract by 1.6% in 2009-2014, as the yen weakens. The short-term currency outlook is positive, however, benefiting foreign drugmakers operating in the market. In 2009, BMI forecasts a healthy 11% increase in drug sales in US dollar terms. But, at the same time, the strong yen has dampened the gains for three of Japan's biggest drugmakers ' Takeda, Daiichi and Eisai ' all of which have invested heavily in overseas markets in recent years. Overexposure to foreign territories coupled with sluggish growth for their main portfolio of prescription medicines, as a result of the looming patient cliff, has left these companies particularly sensitive to exchange rate fluctuations. Meanwhile, the prescription drug sector was boosted in the last quarter by the approval by the Ministry of Health, Labour and Welfare (MHLW) of three blockbuster drugs from foreign pharmaceutical firms. UKbased GlaxoSmithKline's Cervarix will become the first cervical cancer vaccine available on the market, beating its great rival Gardasil, marketed by US-based Merck. However, offering some consolation, Merck has received approval in Japan for its diabetes drug Januvia (sitagliptin), which had sales of US$491mn in Q309. Finally, US-based Wyeth's blockbuster pneumococcal vaccine Prevanar has also been cleared for marketing. In recent years, Japanese pharmaceutical companies have been slow to innovate as a result of strict safety regulations, which have made it difficult for foreign drugmakers to launch products on the market. For years, this gave local players a virtual monopoly in the domestic pharmaceutical sector. But the lack of competition meant that Japanese drugmakers did not push the boundaries regarding product development. They are now trying to reverse this trend and in November 2009, Japan's Takeda announced that it had acquired the rights to US-based Amylin Pharmaceuticals portfolio of obesity treatments in a deal that could reach US$1bn. Takeda has paid a US$75mn upfront fee for one experimental therapy from Amylin, which combines diabetes drug Symlin (pramlintide) with the hormone leptin ' which is related to weight loss. The remainder of the deal is linked to milestone payments. Takeda is keen to expand in the highpotential obesity market as it looks to replace sales from it blockbuster diabetes drug Actos (pioglitazone), which loses patent protection in 2011. Meanwhile, Japan's advanced drug sector and high per-capita spend on medicine ensures that it stays in second position in BMI's Business environment Ratings for the region. However, the maturity of the market means that pharmaceutical sector growth will only be marginal in the coming years.

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Japan Pharmaceuticals and Healthcare Report Q1 2010
Published on December 2009
Report Summary
The value of Japan's pharmaceutical market in 2008 was US$85.8bn. Pharmaceutical sales in Japan are forecast to grow by a
modest 1.3% in local currency terms during the 2009-2014 period. This rate of expansion is below the 2004-08 CAGR of 2.38% and
underlines the mature nature of the market. Meanwhile, drug market sales in US dollar terms will contract by 1.6% in 2009-2014, as
the yen weakens. The short-term currency outlook is positive, however, benefiting foreign drugmakers operating in the market. In
2009, BMI forecasts a healthy 11% increase in drug sales in US dollar terms. But, at the same time, the strong yen has dampened the
gains for three of Japan's biggest drugmakers ' Takeda, Daiichi and Eisai ' all of which have invested heavily in overseas markets in
recent years. Overexposure to foreign territories coupled with sluggish growth for their main portfolio of prescription medicines, as a
result of the looming patient cliff, has left these companies particularly sensitive to exchange rate fluctuations. Meanwhile, the
prescription drug sector was boosted in the last quarter by the approval by the Ministry of Health, Labour and Welfare (MHLW) of
three blockbuster drugs from foreign pharmaceutical firms. UKbased GlaxoSmithKline's Cervarix will become the first cervical cancer
vaccine available on the market, beating its great rival Gardasil, marketed by US-based Merck. However, offering some consolation,
Merck has received approval in Japan for its diabetes drug Januvia (sitagliptin), which had sales of US$491mn in Q309. Finally,
US-based Wyeth's blockbuster pneumococcal vaccine Prevanar has also been cleared for marketing.
In recent years, Japanese pharmaceutical companies have been slow to innovate as a result of strict safety regulations, which have
made it difficult for foreign drugmakers to launch products on the market. For years, this gave local players a virtual monopoly in the
domestic pharmaceutical sector. But the lack of competition meant that Japanese drugmakers did not push the boundaries regarding
product development. They are now trying to reverse this trend and in November 2009, Japan's Takeda announced that it had
acquired the rights to US-based Amylin Pharmaceuticals portfolio of obesity treatments in a deal that could reach US$1bn. Takeda
has paid a US$75mn upfront fee for one experimental therapy from Amylin, which combines diabetes drug Symlin (pramlintide) with
the hormone leptin ' which is related to weight loss. The remainder of the deal is linked to milestone payments. Takeda is keen to
expand in the highpotential obesity market as it looks to replace sales from it blockbuster diabetes drug Actos (pioglitazone), which
loses patent protection in 2011.
Meanwhile, Japan's advanced drug sector and high per-capita spend on medicine ensures that it stays in second position in BMI's
Business environment Ratings for the region. However, the maturity of the market means that pharmaceutical sector growth will only
be marginal in the coming years.
Table of Content
Executive Summary ...5
SWOT Analysis 6
Japan Pharmaceuticals And Healthcare Industry SWOT 6
Japan Political SWOT .7
Japan Economic SWOT 8
Pharmaceutical Business Environment Ratings ........9
Table: Asia Pacific Pharmaceutical Business Environment Ratings, Q110 .... 9
Limits Of Potential Returns ..... 9
Risks To Realisation Of Returns ..... 10
Market Summary ......12
Japan Pharmaceuticals and Healthcare Report Q1 2010 Page 1/5

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Regulatory Regime ...13
Recent Regulatory Developments ... 14
Intellectual Property Developments 16
Pricing And Reimbursement System ......... 17
Table: Reimbursement Categories And Rates ..... 17
Recent Pricing And Reimbursement Developments ....... 18
Other Regulatory Issues ........ 20
Table: Concerns Of Pharmaceutical Associations ......... 22
Industry Trends and Developments ......23
Epidemiology ... 23
Healthcare Sector ...... 26
Healthcare Sector Financing 26
Healthcare Reforms ... 27
International Reaction 28
Industry Forecast Scenario 30
Overall Market Forecast ....... 30
Key Growth Factors ' Industry ....... 31
Macroeconomic Outlook ....... 33
Table: Japan - Economic Activity ... 35
Prescription Drug Market Forecast 36
OTC Medicine Market Forecast ..... 38
Patented Product Market Forecast . 41
Generic Drug Market Forecast ....... 43
Medical Device Market Forecast .... 45
Pharmaceutical Trade Forecast ..... 47
Other Healthcare Data And Forecasts ..... 48
Key Risks To BMI's Forecast Scenario ..... 49
Competitive Landscape .....50
Foreign Generic Drug Sector ......... 50
Key developments in recent years include the following: ......... 52
Pharmaceutical Wholesale and Retail ...... 54
Company Profiles .....56
Leading Foreign Manufacturers 56
Pfizer ..... 56
Sanofi-Aventis .. 59
Merck & Co (Banyu) .. 61
Novartis . 64
GlaxoSmithKline (GSK) ........ 67
AstraZeneca ..... 70
Indigenous Manufacturers ......... 72
Takeda Pharmaceutical Company .. 72
Astellas .. 75
Eisai ....... 79
Daiichi Sankyo . 84
Mitsubishi Tanabe ..... 87
Sawai Pharmaceutical 89
BMI Methodology .....91
How We Generate Our Pharmaceutical Industry Forecasts .... 91
Pharmaceutical Business Environment Ratings Methodology .. 92
Ratings Overview ....... 92
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Table: Pharmaceutical Business Environment Indicators ....... 93
Weighting ......... 94
Table: Weighting Of Components ... 94
Sources ....... 94
Forecast Tables ........95
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