The expertise of the Indian companies to manufacture active pharmaceutical ingredients (APIs) and generics, along with the production facility infrastructure are a great attraction for Japan pharma. According to industry observers , Japanese companies are now looking at India to manufacture and market products back to their country. Moreover Japan is eager to cash in on the market opportunities in Africa and Middle East where Indian pharma has made a headway. Going by the acceptance of high quality phyto-pharmaceuticals and herbal extracts supplies from India, Japan is keen on these imports too.
Growth prospects of bilateral trade is bright with the Prime Minister Narendra Modi and Japan PM Shinzo Abe, unveiling the India–Japan Investment Promotion Partnership at Tokyo on September 1, 2014 when Japan offered to invest 3.5 trillion Yen (US $ 33.5 billion) in India by way of public and private investment and financing over the next five years.
The Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry, Government of India, has set up ‘Japan Plus’, a special management team to facilitate and fast track investment proposals from Japan to achieve this goal. Japan Plus was operational from October 8,2014. It comprises four representatives from Government of India and three representatives from Government of Japan. Of these, Japanese Government has nominated three representatives one each from METI (Ministry of Economy, Trade and Industry), JETRO (Japan External Trade Organization) and Aichi Prefecture. A positive outcome from this was the DCGI and PMDA having regulatory exchange programmes at New Delhi in 2017. This year, Indian regulatory and industry delegation will visit Japan for a similar programme.
Japanese market
The Land of the Rising Sun is the second-largest individual pharmaceutical market in the world. It accounts for less than 10 per cent of the total global pharma market.
The Japanese market holds huge potential, the only barrier currently being the language to communicate. The increasing ageing population is putting pressure on government healthcare expenditures in the country. The generic drug penetration in the country is expected to reach 60 per cent in fiscal 2017 followed by 70 per cent in fiscal 2025. Thus, generic drug companies have huge opportunities in the Japanese market.
Japan Pharmaceutical Manufacturer’s Association (JPMA) has also unveiled a 2025 vision , which outlines business models for drug makers to survive in an increasingly challenging economic environment by foreseeing industry landscape 10 years ahead.
Lupin, Sun Pharma and Dr. Reddy’s Labs among others view the Land of the Rising Sun as a market that cannot be ignored by pharma companies. The switch to generic drugs has created a demand not just for APIs but also for formulations. In July last year, Biocon’s biosimilar Insulin Glargine was approved by the Ministry of Health, Labour and Welfare (MHLW) of Japan. The company through its commercial partner, FUJIFILM Pharma Co. Ltd (FFP) provides high quality, affordable, world class products to diabetes patients in Japan.
According to Deepak Anand, Director-Research, JETRO, there is an increasing focus by Japan on generics to make healthcare affordable. There is also an ageing population. The country plans to increase volume share from the current 30 per cent to 60 per cent by March 2018 and rules for exports to Japan have been now relaxed for Indian generics.
Though Daiichi Sankyo experience had created an air of reluctance to invest and collaborate with Indian pharma companies, post the Meiji Pharma buyout of Bengaluru-based Medreich has provided a different level of conviction about the prevalence of high quality and genuine talent of Indian companies, he added.
According to the company information in the public domain, Japan’s Eisai has set up its India Knowledge Centre in Visakapatnam. This facility manufactures APIs, oral solid dosage forms-tablets and carries out developmental research of APIs. Research labs at Vizag facility are recognized by the Department of Scientific and Industrial Research (DSIR). The facility also received the Certification of ISO 14001:2004 for Environment Management System (EMS) from TUV SUD.
Increasing product portfolio
Dependence on generics has increased because of the budgetary constraints. Japan is keen on Indian APIs since they are convinced of the quality. However Chinese competition is coming in the way. We have more companies from Japan sourcing APIs over formulations. Therefore our medium and large API companies should now scout for increased opportunities to trade in the region, said PV Appaji, former director general of Pharmexcil and present chairman, Meenaxy Pharma.
Since 2016, there has been an increase in product portfolio of the major Japanese companies like Eisai, Sunimoto, Mitsuibishi Tanaka and Otusaka. But the preferred strategy in India is to set up a manufacturing base and engage in drug production. This is possible now because the government of India is going all out to encourage such initiatives. There are also small and medium sized companies like the Santen Pharma and Rohto Pharmaceutical in the ophthalmic space are either looking to increase the product portfolio in India or expand the business in the region. In many cases, market authorisation is on to assess the process of reviewing the dossier to seek licensing and registration approval, said Anand.
Japanese major Meiji has been immensely benefited by the expertise of Medriech, which was exporting to 60 countries. Now at its new plants, products of Meiji are manufactured in India for the Japanese market, he said.
Similarly, Indian pharma companies have made strategic acquisitions of companies in Japan. In August 2016, India’s third largest pharma company Lupin’s Japanese subsidiary Osaka-based Kyowa Pharmaceutical, made an asset purchase agreement with Shionogi, to acquire 21 products.
Indo –Japanese trade
The Indo –Japanese trade relations will help India to access new drugs and novel technologies. This will be beneficial for both the countries as new drug developments can be leveraged to each other’s advantage. “Particularly for India, this investment in R&D will bring in the much-needed value addition in the long run even if it is not a cost-effective model for the short run. More over Japan is keen on India to tap the market opportunities in Africa and Middle East where Indian pharma is strong, noted Anand.
According to JETRO, the pharma industry in Japan will be valued at $75 billion by 2021. In such a scenario, it foresees that large Indian companies can be benefited by acquiring Japanese companies having expertise in novel research.
To help identify the opportunities, JETRO is organising conferences and seminars to share the strengths of both countries in pharmaceuticals. The seminars are also being held in Mysuru, Pune and Hyderabad primarily to target companies in these cities. There is also the provision of clear-cut advisory assistance which will help Indian companies to invest in Japan. There are free incubation centres at least in six cities including Tokyo and Osaka offered by Japanese government free of cost.
“Over a period of 55 days, Indian companies can take a decision if Japan will be the right place to invest. This strategy with much of the preparatory work done, enables Indian companies to enter the market and ink partnerships too. Other than pure pharma, the country is also looking at information technology from India and Bengaluru stands to gain, said Anand.
According Dr. Appaji, the efforts by Ministry of Commerce, government of India and Drugs Controller General of India office have considerably bolstered the brand India image in Japan . Though Indian pharma products are exported across the world, to make a breakthrough in Japan was difficult. However Post 2012, there is a momentum in this direction and more so with the Indian government pact with Japan.