Following the recent interactions between the Indian Prime Minister Narendra Modi and Japanese Prime Minister Shinzo Abe, India and Japan are now stepping up efforts to strengthen business ties.
Japan is a market that cannot be ignored by Indian pharma companies. The changeover to generic drugs has created a demand not just for active pharmaceutical ingredients (APIs) but also for formulations in Japan . India being one of the biggest manufactures of generic drugs, is trying to expand its generic drugs portfolio and gain a foothold in the Japanese market.
At the same time global pharmaceutical firms are also looking to buy stake in Indian firms in a bid to have a pie in the global generics market. On the back of demand from the US and emerging markets, the generics drug market size is poised to reach $335 billion globally by 2017, according to Lucintel, a research firm.
"Japan is an important market and a number of Indian companies have announced their intention to enter the market. However it is a difficult market for Indian generics. Partnerships and product quality will be important to get off on the right foot. Japanese government has expressed a desire to promote generics,” Sujay Shetty, Partner and Leader- Pharma and Life Sciences, PwC India told Pharmabiz in an email interaction.
The Japanese government is also expecting foreign direct investments of nearly US$300 billion by 2020. It has increased investment in generic drugs to reduce the growing health burden. Permitting Indian companies to enter Japanese market is one way to gain expertise in generic drug manufacturing. 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.
About top 25 Indian companies are looking at a strategic entry into Japan through acquisition, collaboration or entry through distributors. Companies present in the region are Daiichi-Ranbaxy, 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 offer a great opportunity for Indian generic majors , according to officials from the Japan External Trade Organization (JETRO).
Since December 2012, Abenomics which are economic policies advocated by Japanese Prime Minister Shinzo Abe focuses on fiscal stimulus, monetary easing and structural reforms. Moreover Japan is already a part of the Trans Pacific Partnership (TPP) negotiations. As India and its pharma industry are concerned over the regulatory and trade challenges coming in with TPP implementation , JETRO is keen that its strategic companies partner with Japan to enter 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 IoT (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,” Shigeki Maeda, executive vice president, JETRO, Tokyo told Pharmabiz.
Maeda was here in India and at Bengaluru in connection with Invest in Japan summit which is part of the IoT investment plan , said that the Pharmaceutical Affairs Act is now amended and it is hoped more Indian pharma companies will make investments because it would benefit both the countries.
“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 that cannot be ignored. We have the infrastructure, connectivity, favourable business environment for Indian pharma to profit from", he added.
Japan also tops in research funding which accounts for $1,636 million or 3.67 per cent of GDP. There are many leading domestic and multinational pharma companies based in India targeting the Japanese market to cater to the growing generic drugs demand, stated JETRO officials.
With generics having a limited patent period, for Indian pharma to remain competitive, it would be prudent to explore new drug development as Japanese companies are strong in innovation, feels JETRO.
Barring some major manufacturers most of the Japanese companies are unable to compete in global market. Hence it provides a perfect synergy for Indian pharma to collaborate with Japanese companies to have a strong global presence, stated industry observers.
Major Japanese pharma companies in India include Medreich Meiji, Takeda Pharmaceutical, Eisai Pharma with a plant in Vizag, Santen Pharma and Rohto Pharma. The 2008 Daiichi Sankyo mega takeover of Ranbaxy ended in April 2015 after Sun Pharma-Ranbaxy acquisition.
Biocon’s Insulin Glargine gets regulatory nod
Biocon has announced that the Ministry of Health, Labour and Welfare (MHLW) of Japan has approved its biosimilar Insulin Glargine. The company through its commercial partner, FUJIFILM Pharma Co. Ltd (FFP) will now offer high quality, yet affordable, world class products to diabetes patients in Japan.
The product is a ready-to-use, prefilled disposable pen with 3 ml of 100IU Insulin Glargine, expected to be launched in Q1 FY17, aiming to capture a significant share of the Japanese Glargine market of US$ 144 million, which is the second largest market outside of North America & Europe and is largely dominated by disposable pens.
The approval for Insulin Glargine has been obtained post successful completion of initial development by Biocon and local Phase III Clinical Studies in over 250 Type 1 Diabetes patients in Japan. Biocon’s manufacturing facilities for Insulin Glargine, and its state-of-the-art disposable pen assembly facility, were inspected and approved by the Japanese regulatory authorities. This pen assembly facility was inaugurated in September 2015 for the launch of Biocon’s Insulin Glargine pen branded as ‘Basalog One’ in India.
“The Insulin Glargine approval in the highly regulated market like Japan, marks a huge credibility milestone for Biocon. We see this as a significant achievement in our journey of making global impact in diabetes management through our affordable biosimilar insulins. We hope to enable the Japanese government to bring down its healthcare expenditure on diabetes with the use of this cost effective, high quality biosimilar Insulin Glargine, said Kiran Mazumdar-Shaw, Chairperson & Managing Director, Biocon.
The per capita spending on pharmaceuticals in Japan is the second highest among OECD countries after the US, and the government is striving to rationalize healthcare spends by encouraging the entry of high quality yet affordable follow-on biologics. This approval will enable Biocon to address the growing needs of diabetes patients in Japan which reported 7.2 million cases in 2015.
Karnataka pharma tryst with Japan
In May 2015 Medreich Limited was acquired by Meiji Seika Pharma following the clearances from Foreign Investment Promotion Board (FIPB) and Competition Commission of India (CCI).
"The deal is the first 100 per cent acquisition of a pharma company by a Japanese company in India. Post acquisition, the company will continue to be known as ‘Medreich’. The entire 2,700 staff are retained with no job losses", said CP Bothra, Managing Director, Medreich Limited.
The 39 year-old medium sized Contract Development and Manufacturing Organisation (CDMO) Medreich, which works for many of the top 10 global drug majors, will combine Japanese and Indian management models of business to deliver greater value. Qualified work standards will continue to be the fulcrum of its operations.
Meiji Seika Pharma is a subsidiary of Meiji Holdings Co. For Meiji, the intent of the acquisition was to get hold of cost-competitive manufacturing infrastructure and to broaden its sales network in many continents, which are seen to be the future of pharmaceutical business growth. Meiji could now expand its CDMO business leveraging on Medreich’s manufacturing capabilities, regulatory accreditations and existing blue chip customer base comprising of GSK, Pfizer, Novartis, Sanofi, Mylan, Adcock, etc. The Medreich’s employees would play a key role in the future growth of the company.
For Karnataka, the entry of a Japanese giant into the pharmaceutical industrial landscape is expected to fuel global drug majors interests in the state. Post Medreich acquisition efforts in June 2014, the state also witnessed the hiving off a profitable business arm of the Jagdale Industries, a multi- product company that sold its ORS-L brand, a ready-to-drink product supplemented with electrolytes to Johnson & Johnson Pte. Ltd., Singapore in November 2014. In September 2014, Strides Arcolab and Shasun Pharmaceuticals announced their merger.
Indian pharma initiatives in Japan
In March 2016, Dr. Reddy’s acquired anti-cancer agent E777 rights from Eisai. While Eisai will be responsible for the development and marketing of E7777 in Japan and Asia, Dr Reddy’s holds the option for rights to develop and market the agent in India.
In 2011, Japan was a growth market of strategic focus. Companies like Lupin acquired Tokyo-based I’rom Pharmaceuticals (IP) and the deal was carried out through Lupin's Japanese subsidiary Kyowa Pharmaceutical Industry Co, Ltd (Kyowa), which it had acquired in 2007.