The two major pharma producing nations: India and Japan, are keen on mutually beneficial partnerships and to increase global presence. While ageing population and rising health costs have prompted the Japanese government to increase the presence of Indian generic drug makers in that country, the central government is keen on attracting Japanese companies to come and ‘Make in India’.
The government is already in talks with 20 Japanese companies to establish contract manufacturing businesses in India. In August, an Indian delegation will be visiting Japan to attract more Japanese companies to India.
Being the second largest pharmaceutical market with one of the largest per capita spending on medicines in the world ($886 in 2013), Japan has remained a focus market for the Indian pharmaceutical industry. Otherwise, United States tops the list of countries importing
Indian generics followed by UK, Germany, Russia and Nigeria.
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 active pharmaceutical ingredients but also formulations. In March this year, Biocon had announced that the Ministry of Health, Labour and Welfare (MHLW) of Japan had approved its biosimilar Insulin Glargine. The company through its commercial partner, FUJIFILM Pharma Co. Ltd (FFP) will now offer high quality, yet affordable, world class products to diabetes patients in Japan.
Japan, a tough market
Japan has always remained a tough market for Indian drug exports, which fell drastically by 20 per cent in 2014-15. The market had registered moderate growth till 2012-13 with an average growth of over 8.5 per cent
“Japan has a different mindset about our quality of generics and it has been very tough to push our exports there. However, now we are negotiating with the Japanese government to come and manufacture drugs in India and utilize our low cost services. This will boost ‘Make in India’ initiative,” said PV Appaji, director general, Pharmexcil.
“We will follow up with those 20 companies which have shown interest in establishing contract manufacturing in India. In addition, we are also planning to attract a new set of companies there. For this, we will hold fresh round of talks with Japanese health regulators,” Dr. Appaji added.
The top 25 Indian companies in the country are looking at a strategic entry into Japan through acquisition, collaboration or entry through distributors. Companies present in the region are Sun, Lupin, Glenmark, Zydus. These companies including Micro Labs, Bal Pharma and Biocon from Karnataka are keen to leverage the advantage of an early entry into Japan. Rising healthcare costs, ageing population and high cost of drug development in Japan will offer Indian generic majors a big opportunity, said officials from the Japan External Trade Organization (JETRO).
Japan wooing Indian pharma
Early this year, the Japanese government had made efforts to seek foreign direct investments (FDIs) to the tune of around $300 billion by 2020. It is now wooing Indian pharma companies to enter the region and maximize its conducive research-innovation eco-system, advanced manufacturing infrastructure and its amended Pharmaceutical Affairs Act which has drastically improved the approval process for medicine and medical devices.
Since December 2012, Abenomics, which are economic policies advocated by Japanese Prime Minister Shinzo Abe, had focused on fiscal stimulus, monetary easing and structural reforms. More over Japan is already part of the Trans Pacific Partnership negotiations. Since India and its pharma industry are concerned over the regulatory and trade challenges coming in with TPP implementation , JETRO sees it as a strategic move for companies to partner with Japan for entering the US and EU markets.
The Japanese trade arm has also deployed experts in India and established an India desk in Tokyo to promote investments and accelerate FDIs. This follows the pact inked between Prime Minister Narendra Modi and Japanese PM Abe at New Delhi in December 2015 to promote FDI from India to Japan.
In May 24, 2013, the Japanese government approved a revision of Pharmaceutical Affairs Law to simplify the approval process for medical devices and regenerative medicine products .
“We are now highlighting opportunities in the areas of Internet of Things and healthcare to invest in Japan. India has an edge in information technology and is also known for its generic drug manufacture. Our county is a global centre for technological innovation and product development. Therefore, Indian pharma could consider foraying into new drug development in Japan,” stated Shigeki Maeda, executive vice president, JETRO.
“Japan has established several laws to strengthen intellectual property protection, and Indian pharma can now look at entering the East Asia which is a market brimming with ample growth prospects. We have the infrastructure, connectivity, favourable business environment for Indian pharma to profit from, he added.
Japan also has research funding and the country tops in this space accounting for $1,636 million which is 3.67 per cent of GDP. There are many leading domestic and multinational pharma companies based in India targeting the Japanese market to cater to the growing generic drugs demand, said JETRO officials.
With generics having a limited patent period, for Indian pharma to remain competitive, it would be prudent to explore new drug development as Japanese companies are strong on innovation, feels JETRO.
Barring some major manufacturers, most of the Japanese companies are unable to compete in global market. Hence it provides a perfect synergy for Indian pharma collaborate with Japanese companies to have a strong global presence.
Major Japanese pharma companies in India include Medreich Meiji, Takeda Pharmaceutical, Eisai Pharma with a plant in Vizag, Santen Pharma and Rohto Pharma. The 2008 Daiichi Sankyo mega takeover of Ranbaxy ended in April 2015 after Sun Pharma-Ranbaxy acquisition.
Once Indian pharma companies enter Japan, they could have the benefit of value- added research because Japan is home to a research-innovation eco-system, advanced manufacturing infrastructure and its amended Pharmaceutical Affairs Act which has drastically improved the approval process for medicine and medical devices, stated JETRO.