Despite the Japanese pharmaceutical market being lucrative with a size of $ 100 billion, Indian companies are not making any serious attempt to enter the formulation and generics market. The overprotective and orthodox environment, stringent market regulations in Japan are some of the reasons cited by Indian companies for this.

However, the biggest restriction is the Japanese race. The top 25 molecules workable in US, and Europe would not be workable in Japan on account of racial differences, said sources. "The Japanese race is very distinct compared to other races. The size of their body and body weight is also unique compared to their western counterparts. As a result, a foreign company will have to undergo exhaustive clinical trials and make changes in the drug to suit the Japanese body weight and other racial requirements," said sources at Lupin.

Also the post marketing surveillance in Japan has become strict and expensive, especially after the recent Arava case in early 2004, when five Japanese had died after taking the Aventis drug to treat arthritis. Sixteen people developed interstitial pneumonia, a debilitating lung condition, after taking the drug. Five of them, aged between 57 and 71, subsequently died

Barring Ranbaxy and Lupin, none of the top Indian pharma companies are looking at Japan as a market for their products. Ranbaxy is in the process of pushing few generics into the Japanese market. Lupin has set up a business development office in Singapore targeting the Japanese market, but has not met with any success so far.

According to sources in Lupin, unlike in US, the regulatory procedures in Japan are quite complex and not open. "There is also language barrier. As Japanese is the official language and only a few in Japan can understand English, it is mandatory to translate one's work (like the documentation following the clinical trials or the product literature) into Japanese," they said.

Besides, there is restriction in the product portfolio for Japan unlike US. Out of the total product portfolio, which Indian companies could offer, only half would be suiting to Japanese disease requirements, he said.

Japan has traditionally been a relative ''no-go'' area for pre-eminent western drug companies. Now, however, extensive cultural, regulatory and technical changes are opening up the market and positioning it as a future key growth area.

Post 2000, there had been quite a few takeovers of Japanese companies by US and European MNCs. These include, acquisition of Mitsui Pharmaceuticals by Schering, UCB's acquisition of pharmaceutical division of Fujirebio Inc, Boehringer Ingelheim's acquisition of 50.23 per cent stake in SSP, Roche's merger with Chugai Pharmaceutical, Abbott Labs' acquisition of Hokuriku Seiyaku, Merck's offer for full ownership of Banyu Pharmaceutical.

Future holds good for Indian drug companies too, said analysts. "Japan could make use of India's infrastructure to manufacture high quality drugs at fractional prices. In the current economic scenario, when the quality and efficacy is not compromised, why would not Japanese want to save its huge manufacturing costs by importing quality formulations and bulk drugs from India," said an analyst in a Mumbai-based equity research outfit.