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"CPhI Japan would aid rev up business"
Thursday, April 16, 2009, 08:00 Hrs  [IST]

Doing business in times of sharp economic fall is never easy. It is in times like this the industry recognises the importance of events like CPhI Japan that opens up new avenues to explore business activities and networking opportunities. With the much talked about CPhI Japan is all set to happen at the Tokyo Big Sight Exhibition Centre, in an e-mail interview to Anil Mathew, Christopher Eve, president, CMP Business Media drew a clear picture of the Japanese pharmaceutical industry, reasons for its lower growth rate, its business environment at this time of economic slump, the role CPhI Japan plays in this fast growing market and importance of events like CPhI Japan in times of economic crisis. Excerpts:


The global recession has taken a heavy toll on Japanese business activities. In this wake, what can an event like CPhI Japan do to revive the spirits of at least pharma and its allied industry in this Land of Rising Sun?
The industries that have been hardest hit in Japan are those that heavily dependent on exports and whose revenues are negatively impacted by the appreciation of the Japanese yen; they include industries such as automobiles and electronics. The Japanese pharmaceutical industry, by contrast, is much more focused on domestic demand and for many companies in the sector the strong yen means that their purchasing costs have fallen. So the pharmaceutical industry is faring much better than other sectors of the economy.

In an economic environment such as we have at the moment the value of many things are falling: stock prices have fallen, real estate values have fallen and with unemployment rising even the value of labour has fallen. However, there is one thing that rises in value at a time like this and that is information. Everybody wants to know what to do, how to respond to the downturn, how to cut costs, etc. Company owners and business managers want answers. An exhibition and conference such as CPhI Japan is the perfect place to find information, ideas and answers. So I believe that the value of participation in an exhibition rises in times of economic difficulty. People will be visiting the show to look for answers and solutions to their problems, and the exhibitors are the people who can provide these answers in the form of innovative new products, technology and collaborative ideas.

Incidentally, the strength of the yen means that the competitiveness of international exhibitors is now very high in the Japanese market. Japanese manufacturers who are looking to cut their costs are going to be very interested in sourcing high-quality, competitively-priced ingredients from overseas suppliers.

It is learnt that Japanese pharma market witnessed much lower growth in 2008 than other major pharma markets. Given this, is it a good idea for global pharma and its allied cos to explore this so called world's second largest pharma market? If yes, why and how CPhI Japan would facilitate this move?
The reason the Japanese pharmaceutical market displayed lower growth than other markets is because the economy is mature, population growth is virtually flat, inflation has been next to zero and there has been significant pressure on prices. However, although market growth is low this hides the fact that significant changes have been taking place within the Japanese pharmaceutical industry. Japanese pharmaceutical companies have been merging and regrouping and the shape of the market is altering. What this means is that many of the traditional buyer-supplier relationships are changing and the notoriously complex distribution channels that exist in Japan are being radically simplified and shortened. This in turn has created opportunities for new suppliers to the Japanese market to find buyers who are willing to abandon their traditional suppliers in favour of companies that can offer innovative products at competitive prices. The high value of the Yen means that the opportunities in the Japanese market for overseas suppliers have never been better.

Since the consolidation wave is strengthening in the pharma industry, how good targets are Japanese pharma to international pharma? Do you think that CPhI Japan can play a role in this consolidation wave? How?
Earlier this decade we saw numerous instances of foreign pharmaceutical companies acquiring Japanese companies and making significant inroads into the Japanese market. This, coupled with revised legislation and government pressure on drug companies to reduce prices, sent a shockwave through the industry in Japan and forced companies that had hitherto been complacent in focusing on the rich, domestic market that the writing was on the wall unless they improved their competitiveness and adopted a more global strategy.

The big news in the second half of the decade has been the acquisition by Daiichi Sankyo of Ranbaxy. This has brought into focus just how seriously Japanese pharmaceutical companies are re-thinking their position in the global marketplace. It is also indicative of a new mindset that is willing to consider radical new business strategies. The era of traditional, cozy relationships between manufacturers and their suppliers in Japan is over. The success of the CPhI Japan exhibition, which serves as a catalyst for the creation of new business relationships, is evidence of this new reality.

According to you, what makes Japan an attractive target for foreign pharma players' organic and inorganic expansion plans? How far has CPhI Japan succeeded in drawing pharma players from other countries to ink business deals with Japanese cos?
Although the growth rate of the Japanese pharmaceutical market is low, for the reasons mentioned earlier, it is nevertheless a huge market, second only to that of the United States. Also, as mentioned previously, Japanese companies have proved themselves to be willing to consider, and implement, radical new ideas and business opportunities that will bring them competitive advantage in a marketplace where the only way to gain growth is through innovation or acquiring your competitors' market-share. The proof of the attractiveness of the Japanese market is that CPhI Japan always attracts a large number of international exhibitors from Europe, the US, China and, increasingly, India. In fact, CPhI ranks among one of the most international of exhibitions in Japan in terms of the ratio of foreign exhibitors to local exhibitors.

Why is that ICSE Japan and P-MEC are held concurrently with CPhI Japan? What makes all these events a must attend for pharma players across the globe?
The provisions of the revised Pharmaceutical affairs law (PAL) have allowed Japanese pharmaceutical manufactures to outsource substantial parts of the research, testing and manufacturing process to third-parties and this is the rational for the launch of ICSE. Had we launched the event 10 years ago, when the previous legislation was in place, it would not have achieved the success it has today. Japanese pharmaceutical companies are now actively taking advantage of their new-found 'freedoms' under the revised PAL and are eagerly looking for partnerships with international companies.

P-MEC fits very well alongside CPhI and ICSE Japan because the target audience is precisely the same people who are visiting these shows: professionals from pharmaceutical companies who are involved in product research and development and the procurement of the related batch-production, testing and quality control equipment necessary for the development of new drugs. Many of our exhibitors in P-MEC participate in various other general exhibitions for measuring equipment and production machinery shows. However they tell us that they value P-MEC because of its precise focus on the pharmaceutical industry and the high quality of the visitors that they meet.

Do you think that CPhI Japan would achieve more relevance in Japanese pharma market in coming years? How?
CPhI Japan 2009 will be the 8th edition of this exhibition. In a very short time CPhI Japan has grown in stature to become one of the key events in the Japanese pharmaceutical industry calendar and as such it is already an 'institution.' It is the only meeting place of its kind in Japan where the international pharmaceutical industry comes to meet 'Japan' on its own territory and where there is a 'global' exchange of ideas and business. As the world pharmaceutical industry becomes ever more globalised and international boundaries erased, the role of CPhI Japan can only become ever more important to the development of the pharmaceutical industry in Japan.

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