The bilateral Comprehensive Economic Partnership Agreement (CEPA), touted as India's most ambitious economic pact  with Japan so far , will ensure greater access to  the Japanese pharmaceutical sector.

CEPA which was enforced from  August 2011, also provides an institutional framework to further accelerate and consolidate business activities between India and Japan. As part of the agreement, India will eliminate tariffs on 90 per cent of its imports from Japan, and Japan will remove tariffs on 97 per cent of Indian imports on a trade-value basis within 10 years.

With tariffs slashed on more than 8000 products which  generic drugs, apparel, agricultural products and machinery the  bilateral trade between both countries is expected to reach US$25 billion by 2014.

The two countries have also signed the Vision for the Enhancement of Japan-India Strategic and Global Partnership upon entering the year of the 60th anniversary of the establishment of diplomatic relations on December 28, 2011.

Experts see that the initiatives with Japan will help to trigger a new synergy into multilateral trade talks and re-energize Doha Round which had not taken off, said Union Minister for Commerce Anand Sharma.

India is working to fast track the free trade agreements with Japan. Now CEPA is an important milestone in the trade and economic relations between the two countries, to  further deepen their economic engagement in terms of trade in goods, services, investment and contribute immensely to mutual prosperity, he added.

Japan provides a huge market for pharmaceuticals as the second largest consumer of prescription drugs after the United States, and is a massive importer of prescription drugs, relying on discoveries made elsewhere. There is a huge focus in particular on antibiotics and anticancer drugs. The growing ageing population also creates a demand for geriatric disorders like orthopaedics, neurological and urological related conditions.  There is a huge opportunity to develop and market cardiovascular, thrombosis, oncology, metabolic disorders, central nervous system and internal medicine and vaccines in the country.

The Japanese the government is working to build prompt and effective assessment systems to measure the innovativeness of drugs and medical devices. This increasingly positive environment encourages foreign companies to place high priority on Japan’s pharmaceutical and medical device market and to aggressively bring their cutting-edge drugs, devices, and technologies into this market.

Further, the Japanese government introduced an integrated package called the “5-Year Strategy for the Creation of Innovative Pharmaceuticals and Medical Devices.” The plan called for concentrated financing of R&D, development of venture businesses, improving the environment for clinical trials, increasing  tie-ups with other Asian countries, speed up and improvement of quality of review, and also an appropriate recognition of  innovative products.

This five-year plan intends  to speedily deliver globally superior drugs, devices, and technologies to Japanese patients and to create an environment that allows product development simultaneously with the U.S. and Europe, according to the Japan External Trade Organization (JETRO).

Top  25 Indian companies are looking at a strategic entry into Japan through acquisition, collaboration or entry through distributors, said JETRO. Present companies have trading and business connections with Japan are Lupin which acquired the Kyowa Pharmaceuticals in 2007 for $100 million (Rs. 45.5 crore) made its second buy in 2010 of I’rom Pharmaceuticals, Tokyo which is a specialty injectable drug manufacturer.

On June 11,  2008, Ranbaxy acquisition by Daichi Sankyo, Japan’s largest innovator company   for US$ 4.6 billion was a milestone in the Indian pharma industry.

The other companies associated with Japan include Dr. Reddy’s  Dishman, Indswift, Suven, Micro Labs, Strides Arcolab, Elder, Biocon and  Bal Pharma.

In the meanwhile with a view to represent the demands of the Indian pharma companies in Japan, the Pharmaceutical Export Promotion Council of India (Pharmexcil), is currently under discussion with India-Japan Pharma Alliance (IJPA) to enter into a Memorandum of Understanding (MoU) with them in Japan. Through this alliance, Pharmexcil hopes to get IJPA's assistance in getting appropriate inputs on regulatory requirements and market dynamics in Japan.

Pharmexcil feels that constant interaction with the Japanese local industry association will help the Indian players to understand their market needs and also help to synchronise India's regulatory standards with that of the Japanese. This would help the Indian industry to devise their products in accordance to the Japanese regulatory norms and help improve Indian exports to Japan.

IJPA is an established alliance in Japan and as of today has no direct relationship with Pharmexcil. However, Dr Kailash D Sharma, one of the founding promoters and chairman of IJPA, and president and representative director, Zydus Pharma Japan informed that the association is currently in talks with Pharmexcil on a possible MoU between the two alliances, details of which will be discussed and agreed upon in the near future.

This strategic decision highlights the governments initiatives in strengthening its business relation with respect to pharmaceutical segment in Japan. The decision to collaborate with this IJPA was taken after the completion of the CPhI Japan in which Pharmexcil through its India pavilion had successfully represented 'brand India' in the Japanese market.

Pharmexcil said that IJPA had helped the Council in organising Brand India Pharma campaign successfully in the sidelines of CPhI Japan, held recently.

According to Dr P V Appaji, director general (DG), Pharmexcil, “With respect to exports, Japan has a huge potential for growth in the generic segment that will provide an excellent business opportunity for the Indian generic pharma companies. Thus it is imperative that we strengthen this relation which is mutually beneficial for both the countries by providing a platform that will help us in understanding industry dynamics of Japan, so that we can take requisite steps to help and guide Indian companies in doing their business in the country.”

"In Asia, Japan holds a great potential for India to tap its markets. As Japan is the second largest pharmaceutical market in the world, India needs to pursue its trade relations with Japan to improve its business in pharmaceuticals, biotechnology and medical devices segments. According to forecasts it is predicted that by 2014 the Japanese market is expected to grow to $87 billion. Having known this, our government as well as the industry leaders should take all the necessary steps to build a long term trade relationship with Japanese industry,” adds Dr  P V Appaji.

Dr Sharma informed that IJPA has been promoted with a view to understand the evolving Japanese government policy towards the generic medicines and to forge a closer bilateral ties between Indian and the Japanese companies in the pharma and other related business.

With the finalisation of the MoU, IJPA will be given the authority to act as the representative of Pharmexcil in Japan, through which Pharmexcil will be able to gauge and analyse the Japanese market more closely so that they will be able to address the issues and the challenges of the Indian companies that are based in Japan more aptly.

The collaboration will help Pharmexcil in getting a clear market dynamics that is prevalent in Japan and  through this they will be able to give important regulatory guidance to the Indian companies interested in establishing business in Japan and to help them overcome their challenges in doing so.

According to Dr Appaji, to further boost the trade between the two countries Pharmexcil is already in discussions with the Japanese generic associations to explore business opportunities. This will be an   important partnership as it will also act as a catalyst to many other collaborations between the two countries with respect to trade and commerce.