BMI View: Multinational drugmakers will face an increasingly tough pricing environment in Japan. With the country's economy unlikely to improve over the short term, this will place greater pressure on the government to contain costs, as accentuated by the decision to revise Opdivo (nivolumab)'s price in the middle of the fiscal year. Beyond the impact on revenue growth, such moves highlight the growing complexity of Japan's pricing environment, with the potential introduction of health technology assessments further affecting the operations of pharmaceutical firms.
Headline Expenditure Projections
Pharmaceuticals: JPY11.5trn (USD94.9bn) in 2015 to JPY11.7trn (USD109.7bn) by 2016 with a y-o-y growth of 2.0% in local currency terms and 15.5% in USD terms. Forecast slightly downgraded due to the introduction of price cuts from April 2016 whose full impact will be mitigated by the entrance of new treatments an d the significant sales of the Sovaldi (sofosbuvir) franchise during Q116.
Healthcare: JPY50.8trn (USD419.4bn) in 2015 to JPY51.7trn (USD482.9bn) in 2016 with a y-o-y growth of 1.8% in local currency terms and 15.1% in USD terms. Forecast unchanged from previous quarter.
|f = BMI forecast. Source: Pharmaceuticals and Medical Devices Agency (PDMA), Japan Self-Medication Industry (JSMI), The Association of the European Self-Medication Industry (AESGP), local companies, BMI|
|Pharmaceutical sales, USDbn||106.137||94.932||109.633||113.919||113.232||113.611||113.868|
|Pharmaceutical sales, % of GDP||2.31||2.30||2.33||2.32||2.30||2.27||2.23|
|Pharmaceutical sales, % of health expenditure||22.5||22.6||22.7||22.7||22.8||22.8||22.7|
|Health spending, USDbn||470.894||419.390||482.891||500.928||497.661||499.134||500.623|
Japan continues to be ranked as the most attractive country in the region according to our Pharmaceutical Risk/Reward Index (RRI), scoring 80.6 out of 100 in Q117, significantly ahead of peers such as Australia (66.0) and South Korea (64.0) as well as the region's average at 51.2 This is driven by the country's high market expenditure scoring (18.0 out of 20.0) as well as a high spending per capita score of (12 out of 12.0). However, dragging down the country's score includes a declining population (population growth score of 1.0 out of 5.0).
In September 2017, Toru Kawanishi, Chairman of the Ministry of Health, Welfare and Labor noted that a 'blue book' will be issued by the end of March 2017. This will include data that hospital and pharmacies could use as reference when selecting generic drugs.
In October 2016, Japan's Central Social Insurance Medical Council (Chuikyo) agreed to a plan to apply price cuts to Ono Pharmaceutical's Opdivo (nivolumab). Critically, this is expected to be implemented before the next biennial price revision scheduled for April 2018.
That same month, a lawsuit was filed by 63 women who claimed that they were damaged by human papillomavirus vaccines. Suits were launched against the government and drugmakers GlaxoSmithKline and Merck Sharp & Hohme in the district courts of Tokyo, Osaka, Nagoya and Fukuoka. A nationwide survey by the ministry research team is expected to have an impact on the lawsuit and, critically, whether the government will again recommend the vaccination to the public.
BMI Economic View
With real GDP growth coming in below consensus at 0.2% q-o-q annualised in Q216, and recently-announced fiscal stimulus measures set to have a negligible impact on headline growth even in the short term, we maintain our 2016 and 2017 real GDP forecasts at 0.6% and 0.5%, respectively. The JPYUSD pair is currently testing support and option implied volatility markets suggest a significant move could be on its way.
BMI Political View
With a strong mandate to pursue structural economic reform, the LDP has a good opportunity to raise productivity and boost labour force participation. However, reform proposals, particularly relating to the labour market, appear to be missing the mark.
The Japan Pharmaceuticals & Healthcare Report features BMI Research's forecasts for drugs and healthcare expenditure and imports and exports, focusing on the growth outlook for the prescription, OTC, patented drugs and generics market segments.
BMI's Japan Pharmaceuticals & Healthcare Report provides industry professionals, strategists, company executives, investors, analysts and sales/marketing heads with independent forecasts and competitive intelligence on the Japan pharmaceutical and healthcare industry.
- Benchmark BMI's pharmaceutical and healthcare market forecasts for Japan, to test other views - a key input for successful budgeting and strategic business planning in the Japanese pharmaceutical and healthcare market.
- Target business opportunities and risks in the Japanese pharmaceutical and healthcare sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Japan.
- Assess the activities, strategy and market position of your competitors using our company profiles (including SWOTs, KPIs and latest activity) and competitive landscape tables.
BMI Industry View
An at-a-glance perspective on the latest regulatory developments, key forecast indicators and major corporate developments, covering the prescription, OTC and generics markets. The pharmaceuticals and healthcare SWOT outlines strategic factors that affect the basic assumptions underpinning BMI’s forecast analysis, and taken together with BMI’s political, economic and business environment SWOTs, it gives a complete overview of market climate.
BMI Industry Forecast Scenario
Industry forecasts to end-2019 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:
- Healthcare: Total healthcare expenditure (USDbn), healthcare expenditure (% of GDP), healthcare expenditure per capita (USD), hospital beds, doctors, and birth & mortality rates (all per ‘000 population).
- Pharmaceutical Market: Drug expenditure in USDbn, % of GDP and per capita (USD).
- Patented Drug Market: Prescription drug sales (USDbn & % of total sales).
- Generic Drug Market: Generic product sales (USDbn), generic sales (% of total sales).
- OTC Drug Market: OTC sales (USDbn & % of total sales).
- Macroeconomic Forecasts: Nominal and real GDP, % real GDP growth, % private consumption growth, % industrial output growth, % consumer price index, % GDP price deflator, exports, imports, trade balance, current account balance, foreign direct investment, exchange rate against USD, government expenditure and external debt.
BMI’s Pharmaceuticals and Healthcare Risk Reward Index
BMI’s Risk Reward Index provides investors (both national and multinational) looking for opportunities in the region with a clear country-comparative assessment of the market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
A snapshot of key market characteristics, including total size of the pharmaceuticals and healthcare segments, growth drivers, leading therapeutic areas and the competitive landscape
A focus on government healthcare reforms, epidemiological trends, mergers and acquisitions, product launches, market entries, FDI activity, R&D, biotechnology, clinical trials and supply chain issues.
Details of the industry regulatory framework and key legislation covering the licensing of new products/services, pricing and reimbursements, intellectual property, taxation and advertising, as well as analysis of the overall regulatory burden.
The competitive landscape section provides comparative company analyses and index by USD sales and % share of total sales – for the total pharmaceutical sector, as well as the OTC, generics and distribution sub-sectors.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.