Japan is planning to triple its generics sector by 2012 according to the Japan Pharmaceuticals and Healthcare Report Q2 2010.While in 2009, generic drugs represented an estimated 9.4 per cent of the total market by value, the report forecast this share to increase to 15.5 per cent in 2014, and further to 23.5 per cent by the end of 2019.Over the next three years, Japan's annual spending on generics is expected to grow to 705 billion yen, or $7.9 billion.
Facing ballooning medical costs as the population ages, the government has said it wants generic drugs to make up nearly one-third of the overall drug market in three years. It aims to lift the volume-based share of generic drugs in the prescription drug market to at least 30 per cent by March 2013 from the current 20 per cent. It aims for generic drugs to make up 30 drug market by sales volume in the year to March 2013, up from about 17 percent in the year ended in March 2009.
Recent economic trends, including a burgeoning national budget deficit, combined with a rapidly expanding elderly population, are coalescing to create market conditions favourable to increased sales of generic drugs in Japan
Japan is one of the biggest generics markets, largely because its government is aggressively working to push people toward copycat meds. Though Japan is the second largest pharmaceutical market in the world, only five per cent of the market, by value, is taken by generic drugs. Like other major industrialised nations Japan has an ageing population and ageing populations take a disproportionate share of healthcare spend. For Japan the problem is very marked since it has the highest life expectancy of any major country and spends about 45 per cent of its healthcare budget on geriatric care. In 2002 Japanese healthcare insurance was on the verge of bankruptcy. Hence the government is keen to increase the market share of generics.
Sawai Pharmaceutical, leading maker of generic drugs in Japan has forecasted the market to grow to 705 billion yen by the year to March 2012, from estimated 550 billion yen in the current business year.
Similarly Japanese think tank Fuji Keizai forecasts that sales of generic drugs in Japan will is likely to reach 448 billion yen next year, up an estimated 14 per cent from this year. Teva has projected that the market will expand to one trillion yen by 2015.
According to “Japanese Generic Market Forecast to 2013”, a research report by RNCOS, Japan promises to be one of the most lucrative generic markets in the world. Between 2005 and 2008, the Japanese generics market grew at a CAGR of around 7.5 per cent to register ¥ 333 billion (US$ 3.5 billion) in revenue.
The generic market is presently dominated by domestic manufacturers, with the top six manufacturers accounting for 56 per cent of the total market in 2007. But opening up of the market and introduction of a number of generic-friendly reforms is attracting a number of foreign players in the market.
Despite such a big opportunity for future, the market also has a number challenges to deal with.
However generic drugs are still regarded as cheap, low quality alternatives of branded drugs here. Both physicians and patients are sceptic regarding their safety and efficacy. A number of awareness and educational programmes, however, are expected to increase their awareness in future.
Despite these challenges, RNCOS forecast models suggest that the generic drugs market will grow at a CAGR of around 8.8 per cent between 2009 and 2013.
Opportunities in the generics sector are being increasingly explored by foreign companies, with Israeli generics specialist Teva and traditionally research-based Pfizer recently reporting their plans for entry into the market. Teva, which formed a joint venture with Kowa Pharma, are planning a more aggressive strategy that will involve marketing around 200 generic drugs by 2015.
Pfizer says it may storm the generics market there beginning in 2011 as part of an overall effort to diversify. Importantly, 2011 is also D-Day for Lipitor's patent expiration, which will blow a billion-dollar-plus hole in Pfizer's branded drug revenues.
Diversifying into generics in Japan is just part of Pfizer's global overhaul, designed to build up new markets to help offset slowing growth and generic competition in mature markets such as the U.S. The company unveiled its plans for Japan a couple months ago.
In 2009, generic companies such as Sawai Pharmaceutical, Towa Pharmaceutical and Nichi-Iko announced plans to introduce their versions of a number of blockbuster drugs whose patents expire this year.
Similarly Daiichi Sankyo, Japan's third biggest drug maker recently said that it would enter Japan's generic-drug market this year, targeting fast-growing demand as the government promotes greater use of generics to offset rising healthcare costs.
Daiichi Sankyo, which bought a majority stake in Indian generic drug maker Ranbaxy Laboratories in 2008, said it would set up a fully owned subsidiary in Japan to enter the market. It aims for annual generic drug sales of about 50 billion yen ($560 million) by 2015, company spokesman Satoru Ogawa said.
Japan's numero uno generic drug maker, Sawai Pharmaceutical, aims to lift its share of the growing domestic market despite competition from bigger foreign players and a headwind from government price plans, its president said recently .