Generic in Japan

Generics in JapanEvolving pricing, regulatory, and business environments Reference Code: BI00050-008 Publication Date: January 2012 1 About the author Donald Macarthur is an independent pharmaceutical industry consultant and analytical writer with over 70 major report titles to his name. Covering most of the major ex-US countries, his focus is pricing, reimbursement, and market access of prescription medicines, life cycle management, and distribution. He has been visiting Japan regularly for the past 25 years and is recognized as one of the west‟s leading commentators on its market and industry. Disclaimer Copyright © 2012 Business Insights Ltd This report is published by Business Insights (the Publisher). This report contains information from reputable sources and although reasonable efforts have been made to publish accurate information, you assume sole responsibility for the selection, suitability and use of this report and acknowledge that the Publisher makes no warranties (either express or implied) as to, nor accepts liability for, the accuracy or fitness for a particular purpose of the information or advice contained herein. The Publisher wishes to make it clear that any views or opinions expressed in this report by individual authors or contributors are their personal views and opinions and do not necessarily reflect the views/opinions of the Publisher. 2 Table of Contents About the author 2 Disclaimer 2 Executive summary 11 Organization and funding of Japan’s healthcare system 11 Regulatory environment 11 Pharmaceutical business environment 12 Generics market 13 Attitudes toward generics 14 Generics industry 15 Generics company strategies and generics defense 15 Market prospects 16 Chapter 1 Organization and funding of Japan’s healthcare system 18 Summary 18 Introduction 19 Key actors 20 Health insurance 21 Schemes managed by the government 21 Schemes managed by large companies 22 Schemes managed by the municipalities 22 Health insurance for the elderly 22 Private insurance 23 Healthcare providers 23 Healthcare benefits 24 3 Remuneration of providers 24 Fee-for-service 24 DPC hospital funding 26 Dispensing fees 28 Patient co-payment 29 Healthcare expenditure 31 Chapter 2 Regulatory environment 34 Summary 34 Intellectual property protection 35 Marketing approval 37 NHI drug tariff 41 NHI price setting 42 NHI price revision processes 44 Biennial revision 44 Repricing 46 Long-listed brands 46 Correction premiums 49 Overall impact 52 Generic encouragement measures by government Inconsistent government policies 53 57 Chapter 3 Pharmaceutical business environment 59 Summary 59 Pharmaceutical market 60 Research-based pharmaceutical industry 62 Generic industry 64 4 . Wholesalers 66 Pharmacies 68 Foreign exchange rates 70 Chapter 4 Generics market 71 Summary 71 Introduction to generics 72 Market size 76 Generic inclusion in NHI drug tariff 78 Introductory pricing of generics 82 Price revision of generics 83 Distribution of generics 85 Chapter 5 Attitudes toward generics 87 Summary 87 Insurers 88 Physicians 88 Hospitals 91 Pharmacists 92 Wholesalers 95 Patients 96 Chapter 6 Generics industry 99 Summary 99 Traditional domestic generic companies 100 Domestic R&D company presence 102 Distributor presence 103 5 . Multinational presence 104 Indian companies 106 Company profiles 108 Fujifilm 108 Nichi-Iko 109 Sandoz 109 Sawai 110 Teva 112 Towa 113 Exports 113 Chapter 7 Generics company strategies and generics defense 114 Summary 114 By generic sector 115 Generic companies 115 Generic industry associations 117 Counterstrategies by innovative manufacturers 118 Molecule case studies 120 Amlodipine 120 Clarithromycin 122 Donepezil 122 Famotidine 123 Lopamidol 124 Pioglitizone 125 Pravastatin 127 Risperidone 128 6 . Chapter 8 Market prospects 129 Summary 129 Introduction 130 Generic opportunities 131 Further incentives needed 131 Likely changes affecting generics from April 2012 133 Long-listed brands 136 Reference pricing 136 Fixed-dose combinations 137 Premium for new drug creation 138 Other reform measures 139 Other factors influencing generic prospects 140 Conclusions 141 Appendix 143 Scope 143 Methodology 143 Primary research 143 Secondary research 143 Currency exchanges rates 144 Glossary/Abbreviations 144 Bibliography/References 145 7 . 2010 74 Figure 4: Generic volume penetration by country. 2009 77 8 .Table of figures Figure 1: NHI drug list by route of administration. 2010 41 Figure 2: JGA member companies 65 Figure 3: Breakdown of generic listing in the NHI tariff by product nomenclature. 2008–2011 81 Table 25: Calculation of initial NHI prices for generics. 1992–2010 82 Table 26: Results of biennial NHI price revisions: Overall average price cuts versus those for generics 84 Table 27: Japan Generics Association companies by size. 2007 100 Table 28: Consolidated results of leading listed domestic generic manufacturers. 2002–10 48 Table 12: NHI drug price revisions since 1981 52 Table 13: Market share evolution (%) by customer type. 2005–09 40 Table 10: Share of product portfolio of Japanese R&D companies accounted for by long-listed brands 47 Table 11: Additional price cuts for long-listed brands. 2003–11 78 Table 23: Examples of new generics first listed in NHI tariff. 2002–10 76 Table 22: Numbers of new tariff-listed generics. forecast for FY2011 101 Table 30: Generic sales of innovative Japanese manufacturers. 2008 27 Table 5: Specimen outpatient hospital bill 30 Table 6: Growth in national medical costs. 2008 27 Table 4: DPC hospitals by bed numbers. 2012-22 33 Table 8: Specifications required for generics by type of formulation 39 Table 9: PMDA review times for new generic applications. 2009 (or latest available year) 19 Table 2: Main health insurance schemes 21 Table 3: Penetration of DPC in hospitals. FY2011 67 Table 18: Top 10 chain pharmacies. 2008 69 Table 19: Breakdown of the NHI drug tariff by product type. 1992–2009 60 Table 17: Forecast sales of leading wholesalers.Table of tables Table 1: Japan‟s healthcare in perspective. 1999–2007 80 Table 24: Examples of new generics first listed in NHI tariff. forecast for FY2011 101 Table 29: Other data on leading listed domestic generic manufacturers. 1990–2008 32 Table 7: Number (million) and share (%) of population older than 65 years. 2007 72 Table 20: Specimen brand names of popular generics 75 Table 21: Generic penetration in Japan. FY2010 103 Table 31: Generic market entrants from overseas: evolution and current status 105 Table 32: Generic market entrants from overseas: evolution and current status (continued) 106 Table 33: Representative value-added innovations from Sawai 116 9 . 2007–11 144 10 . 10mg tablet 128 Table 39: Examples of major molecules expected soon to go off-patent in Japan. 1996-2010 125 Table 38: Recent NHI price erosion with Mevalotin and generic pravastatin. 50ml) and leading generic version. 2002–10 123 Table 37: Change in NHI prices (¥) of Iopamiron (150 strength.Table 34: Examples of combination products launched around the time of patent expiry of one component Table 35: 120 Change in NHI prices of selected first wave generics of amlodopine 5mg tablets. Oipamiron. 2012–2013 131 Table 40: Average exchange rates. 2008–10 122 Table 36: Change in NHI prices of selected first wave generics of famotidine 20mg tablets.  Regardless of setting. However.  The entire population is covered by health insurance schemes. Korosho). and with relatively few exceptions other than welfare recipients. known as benefits under National Health Insurance (NHI). There is no limit to the number of patent extensions for new indications or changes to the manufacturing process. Japan has the fastest-ageing society in the world.  As in other countries. 11 . the equivalent of 10. municipalities or the government. Labor and Welfare (MHLW. the co-insurance rate is 30%. There is no family doctor system. For most. healthcare expenditure is rising fast in Japan.007bn ($388bn) in FY2009. managed by large employers. patients can select any GP clinic or hospital outpatient department. a growing number of hospitals are paid for inpatient care through a prospective diagnostic procedure combination (DPC) system.Executive summary Organization and funding of Japan’s healthcare system  Healthcare comes under the Ministry of Health.  Healthcare providers are mainly paid on a fee-for-service basis. with a points-based fee schedule. They offer a common package of care. patients are required to pay an age-dependent fixed percentage of their medical costs as a co-insurance under NHI. The main advisory body to its minister is the Central Social Insurance Medical Council (Chuikyo).61% of GDP. One main cost driver is ageing. Regulatory environment  New drugs benefit from 20 years‟ patent protection. Under DPC. There is a maximum five-year patent term extension to compensate for the period needed for clinical development and regulatory review. the payment a hospital receives for treating a patient with a particular diagnosis is the same regardless of the interventions applied or the cost of drugs administered. reaching a record ¥36. self-dispensing GP clinics for 20%.  Ten of the top-20 pharmaceutical companies by sales in 2010 were of foreign origin. Combined they held a 32. second or third entry in the class and are within three years of first entry to the class are priced by similar efficacy comparison.  New drugs which represent the first.7% market share. to bring tariff prices closer to market levels.6%. A new reimbursement price is obtained by adding the discount allowance (known as the adjustment zone) – 2% of the pre-revision NHI price – to the weighted average market price as measured in biennial surveys. through biennial price revisions.  Additions to the NHI drug tariff for new drugs are made four-times a year. The aim is to publish the NHI price within 60 days of regulatory approval. usefulness. with reimbursement limited to tariff rates. Pharmaceutical business environment  Sales of all prescription medicines in 2010 amounted to ¥8.  Community pharmacies accounted for 50% of the 2009 total.4%. 12 . almost the same as the top-10 Japanese-origin companies. Generics are subject to an abbreviated process with a target review time of 10 months.873.  If a new drug is the fourth or later entrant to its class it may be considered to lack novelty and be classified as a “me-too”. There are additional premiums for innovativeness. Examination for marketing approval is performed by the Pharmaceuticals and Medical Devices Agency (PMDA).  For inpatients and outpatients alike.  MHLW attempts. and medium-small hospitals for 7.6bn ($101bn) at NHI prices. pediatric use or small market size. These are priced according to the class average price with no possibility of added premiums or foreign adjustment. only medicines (brand or generic) listed in the NHI drug tariff can be prescribed. This method sets the price by reference to the NHI cost of an existing product. large hospitals for 22. Regular across-the-board NHI price cuts on April 1st have been a feature of the market for over 50 years. erratic supply.  Dispensing by community pharmacies probably accounts for 50% of total generic use. Patent-expiring blockbusters can attract attention from 30 or more generic companies. Pharmacies.  Generic companies in Japan have a long-standing reputation for poor product quality. are of increasing importance as the volume of in-house dispensing by hospitals and by GP clinics declines due to the success of the government‟s long term policy of bungyo (the separation of the functions of prescribing and dispensing). Subsequent generics receive the lowest tariff price for that ingredient up to 20 copies. Despite their large numbers. is an academic body independent of the sector. and non-DPC hospitals (12-15%).  More than 200 new generic products and in excess of 600 presentations are tariff-listed each year. strengths and pack sizes. they held market shares of only 9. questionable business practices. The Japan Society of Generic Medicines (JSGM). 13 .  Almost all distribution of prescription medicines (except some generics) goes via wholesalers. bioinequivalence. and offering inadequate distribution and information services. after which they receive 90% of the lowest tariff price of an existing generic . though funded by some generic companies. Generics market  Generics account for nearly half the drugs in the NHI list. DPC hospitals (12-15%). especially chain pharmacies. The balance is made up by GP clinics (25%). Forty four of these are members of the Japan Generic Medicines Association (JGA).4% by value and 23. for making available only a limited number of formulations.  First generics are priced at 70% of the tariff price of the originator brand. Over 80 of the 378 firms with products listed in the NHI drug tariff are generic companies.7bn). with the numbers having increased since the process became a biannual event in 2007.1% by volume in FY2010 – among the lowest shares of any OECD country – with sales on an NHI price basis of about ¥834bn ($9. are being replaced by wholesalers. or two/three NHI price revisions. 14 . offer greater margins. Self-dispensing clinic doctors are active users of generics.  No incentives are currently given to doctors through NHI to prescribe generics. with their higher prices than generics. sometimes routinely. Non-DPC hospitals have little incentive to use generics. traditionally the main route to market for generics. Due to price erosion and competition.  Physicians employed by hospitals are salaried and have no economic incentive from prescribing one drug rather than another. though one-third of prescription forms had the “do not switch” column signed. but the results have been impressive. though their numbers are declining. especially after patients may be reluctant to follow their recommendation and defer instead to the doctor‟s choice. with purchases made as part of a basket deal. many independents believe it is not worth the effort. Originator brands. new generics often have a commercially viable lifespan of less than five years.  The 2008 change from doctors being required to authorize substitution to them being required to specifically block it greatly increased generic substitution opportunities. apart from lessening the patient‟s co-payment burden. The average pharmacy uses generics from 5–10 companies.  Local sales agents (hansha). Wholesalers aim to prioritize stockholding from five generic suppliers. Manufacturers can only stay in business through aggressive marketing of new generics and by introducing a steady stream of replacement products.  Though pharmacies earn additional fees for high generic usage. Only a small proportion of the population has received such mailings. Attitudes toward generics  Some health insurance societies now provide their members with written information on how much they could save by switching to generics. Multiple pharmacies are more enthusiastic users of generics.  DPC funding for hospitals has stimulated low-cost drug purchasing and given a boost in particular to the use of injectable antibiotics and anticancer drugs in generic form. and Towa – dominated generic sales for many years. Investment has not only been one-way. newcomers both from Japan and from overseas. and Pfizer. and the burden of explanation to patients. entered the business in the 1990s. collaborating to ensure portfolio gaps are filled. The typical saving in co-payment from accepting a generic in place of the prescribed brand is insufficient to override this. 15 . Product portfolios now include added-value generics and long-listed brands. Medical representative numbers are being increased to detail both doctors and pharmacists. The most important recent move has been Teva‟s acquisition of Taiyo. the large stock inventory needed. Most other companies were very small. Hospira. who are often suspicious of them. Other issues facing pharmacists with generics are reduction in revenue. Sanofi and Teva – now have Japanese operations.  Most of the leading multinational generic companies – including Actavis. Meiji Seika. Daiichi-Sankyo acquired Ranbaxy in 2008. Sawai. Such companies included DaiichiSankyo. and working towards the aim of a zero out-of-stock situation. Mitsubishi Tanabe. Lupin has purchased two local companies. Lupin.  Lured by expectations of market expansion. Mylan. Nippon Kayaku. several R&D majors set up or acquired divisions dedicated to generics or to generics and long-listed brands. only later to disinvest.  There is also a strong presence in Japan of Indian generic companies including Aurobindo. Taiyo (an unlisted company). Generics company strategies and generics defense  The leading generic companies are expanding their production capabilities.  A high proportion of decisions not to use generics comes from the patient. Kyowa Pharmaceutical and I‟Rom. independently or as joint ventures and alliances. Dr Reddy‟s and Zydus Cadila. Nippon Chemiphar. Eisai. More recently. Sandoz. Generics industry  Four domestic companies – Nichi-Iko. To achieve 30% penetration by end-March 2013. and new.  The MHLW‟s target for volume share of generics is behind schedule. self-dispensing GP clinics. 16 . Many firms are trying to get their brands stocked by the big nationwide wholesalers. extending the patent life with new indications. knowing this is the key to access DPC hospitals and dispensing pharmacies. and misinformation campaigns run by medical representatives.  Generic companies classify generic defense strategies by innovators into four groups: patent litigation. line extensions.  Generic awareness campaigns have been run by the industry association for many years and in 2007 the JGA initiated its “Reliability Improvement Project” for members focused on continuous supply. Chain pharmacies are a particular target.should be the beneficiary of new financial incentives  A number of changes are likely to be implemented at the time of the April 1st 2012 biennial revision. when more than 10 applications for the same generic are made (oral forms only) the NHI price will be 60% of that of the originator product. usage should have been 27% when the biennial survey was last conducted in September 2010.  To encourage generic usage. In fact. though they do not consistently favor generics. Market prospects  2012–2013 presents fewer big new generic opportunities than 2010–2011 did. ensured quality and appropriate provision of information. Others are keen to support their business in the traditional market for generics. it was less than 23% and is forecast to fall short of the 2013 target by more than five percent. in particular fixed-dose combinations.  The gains achieved after fee restructuring in FY2010 were short-lived.  The generic industry is divided as to which party – the doctor for recommending their use or the patient through a lower co-payment burden . instead of 70% at present. stronger incentives are needed.  From April 2012 it is likely that if prescribers wish to block substitution they will need to do this on a product-by-product basis. 17 .  Changes to the generic dispensation preparedness increments for pharmacies are to be made. Only pharmacies that dispense more than 22% of generics will obtain additional fees. though there will be a new fee for providing patients with written information on the savings they can make from generics. To reduce price variation between generics. grouping in price bands is planned with reimbursement based on the weighted average market price of the group. For most. a growing number of hospitals are paid for inpatient care through a prospective diagnostic procedure combination (DPC) system. the equivalent of 10. the payment a hospital receives for treating a patient with a particular diagnosis is the same regardless of the interventions applied or the cost of drugs administered. They offer a common package of care.  Regardless of setting.007bn ($388bn) in FY2009. with a points-based fee schedule. 18 . known as benefits under National Health Insurance (NHI). municipalities or the government. There is no family doctor system. the co-insurance rate is 30%. patients are required to pay an age-dependent fixed percentage of their medical costs as a co-insurance under NHI. reaching a record ¥36. Korosho). patients can select any GP clinic or hospital outpatient department. One main cost driver is ageing.  The entire population is covered by health insurance schemes. The main advisory body to its minister is the Central Social Insurance Medical Council (Chuikyo).  As in other countries.61% of GDP. managed by large employers. Under DPC.  Healthcare providers are mainly paid on a fee-for-service basis. and with relatively few exceptions other than welfare recipients. Japan has the fastest-ageing society in the world. However. healthcare expenditure is rising fast in Japan.Chapter 1 Organization and funding of Japan’s healthcare system Summary  Healthcare comes under the Ministry of Health. Labor and Welfare (MHLW. 1 5.3 3. 2009 (or latest available year) Country Health spending as % of GDP Heath expenditur e per capita (USD PPP) Practicing physicians per 1000 population Infant mortality rate (per 1000 live births) Adult obesity (%) Life expectancy (years) 8.6 23 80. Table 1: Japan’s healthcare in perspective.2 81.8 78. 19 .8 3487 2.6 2878 2.4 6.6 Japan Note: PPP = purchasing power parity Source: OECD BUSINESS INSIGHTS Lower healthcare costs.3 France 11.7 20.4 7960 2.4 3. in particular by comparison with the US.6 4218 3. especially obesity (but not male smoking)  less aggressive treatment  lower hospital staffing levels  smaller administrative burdens  a lower income of the majority of Japanese doctors (who are paid on a salaried basis).7 4.5 NA 80.5 UK 9.4 21 78.6 3.2 Germany 11.2 2.Introduction The Japanese are amongst the healthiest people in the world at a cost that appears modest compared to the national income (Table 1). can be explained by:  a lower incidence of disease  a lower incidence of risk factors.5 33.9 83 US 17.5 3223 3.8 3978 3.4 OECD average 9. Korosho) is responsible for promoting and improving social welfare. the Ministry (then known as Koseisho) was responsible for health and welfare only. The lead on the side of the payers is taken by the National Federation of Health Insurance Societies (Kemporen). As a consequence the LDP‟s powers have lessened and so has those political influence of the JMA. The main advisory body to the Minister on matters relating to health insurance. representing all individual societies that cover employees in large firms. The political party that had been the dominant force in the post-war years. was by tradition heavily influenced on healthcare matters by the JMA.Key actors The Ministry of Health. 20 . the Democratic Party of Japan won the most seats at the 2009 election. have always been somewhat marginalized in any big debate. and social security. Along with the Ministry of Finance. as specialty organizations are not well developed in Japan. the Liberal Democratic Party (LDP). including medical fees and drug reimbursement pricing. Prior to 2001. There are also eight on the payer side (four insurers and two each from employee unions and management). so its leader became prime minister. and is naturally dominated by the JMA. It is a major provider of political donations to the LDP and its candidates for parliament (Diet). It provides the decision-making forum for health policy. Labor & Welfare (MHLW. Other actors are the Japanese Business Federation (Keidanren) and the labor unions (Rengo). the JMA purports to speak for all physicians. public health. Nihon Ishikai) have dominated the struggle for reform. the MHLW and the Japan Medical Association (JMA. including the pharmaceutical industry. MHLW is used throughout this report to describe both the former Koseisho and the present Korosho. Other players. plus four ”public interest” representatives. The providers‟ side has eight of the 20 members (five doctors. Through different categories of membership. two dentists and one pharmacist). However. is the Central Social Insurance Medical Council (Chuikyo). There is a single insurance pool and one rate contribution for all. All schemes are subject to governmental oversight and regulation through MHLW. The schemes are run by MHLW which estimates overall expenditure and negotiates a fee schedule with providers. it has been obligatory for all Japanese people to be affiliated to one of several types of health insurance programs in accordance with their occupation (Table 2).5 employer 50%: employee 50% Employees health insurance 32 3 8.3 (average) employer 50%: employee 50% National Health Insurance 48 24 variable by region Source: Business Insights Typical costsharing government/prefect ure 50%: insured person 50% BUSINESS INSIGHTS The public cannot select their insurer and the insurer cannot select the treatment provider. known as seifu kansho. and ensures that coverage is available to all. This schedule also applies to the other types of health insurance. the government levels the playing field between the different schemes.Health insurance Since 1961. The range of services to be provided is fixed. Schemes managed by the government Health insurance programs for employees of small to medium-sized firms and their dependents. as are insurance premiums and co-payments. By contributing to the various plans. are managed by the state through a quasi-government body. 21 . Table 2: Main health insurance schemes Type Subscribers & dependents covered (million) Proportion of aged (%) Typical premium (% of income) Governmentmanaged health insurance 37 6 8. the Japan Health Insurance Association. There are 166 such societies for specific occupations. depending on assets and the cost of care in that region. up to a certain ceiling. Schemes managed by the municipalities National Health Insurance (NHI. dentists. such as construction workers. Health insurance for the elderly The Health Program for the Elderly (rojin hoken seido) started in 1983. Members are affiliated to other health insurance organizations that contribute on the basis of their number of elderly members and the share of actual expenditure incurred. Health insurance for the poor and the mentally disabled is not financed from the health insurance system but from the welfare system. and workers hired by the day. and their dependents. are covered by Day Laborer‟s Insurance. for example the self-employed. Contributions are determined by each municipality. the retired and the unemployed. shopkeepers. 22 . It covers those over 70 years. A central government subsidy is needed as about one-fifth of all those covered by NHI are in households without any income. Contributions are deducted at source.000+. A small specialized group of people who work as crews of ships are covered by Seaman‟s Insurance. Including the municipal governments. The schemes are administered by joint management/union committees.780 health insurance societies (kenpo kumiai).Mutual aid associations provide coverage for national and local government employees and teachers. managed at the company level by a total of about 1. and pharmacists. based on income and the family size. They are paid for each family by the head of the household in the form of tax. farmers. kokumin kenko hoken) covers persons not covered elsewhere. there are over 3.300 societies in total. or those over 65 who are bedridden – a total of about 16m people. The insurer is usually the municipality of residence but some professions can also form national health insurance societies. including those for doctors. covers employees of any single company with more than 700 workers or any group of companies with 3. Schemes managed by large companies Employee‟s health insurance (shakai hoken). 563 beds. public hospitals run by government (mostly at the local level). or for drugs which do not have regulatory approval in Japan. and the number of clinics (0-19 beds) was 99. providing a total of 88. For example. the average length of hospital stay is high by international standards.665. Among companies offering health plans are Aflic and AIG. By the end of 2010. the patient usually has to bear the entire cost out of pocket).0/million. Some policies pay out for cancers and other critical illnesses.73 million beds. the number of hospitals (20 or more beds) was 8.e. There is no private gap insurance (i. Healthcare providers Healthcare providers fall into two groups: Office-based physicians in clinics and those in hospitals. and university hospitals. Hospitals depend on outpatient care for much of their business and clinics can retain this definition and have up to 20 beds. Hospitals can be further subdivided into privately owned ones. Others cover non-medical related expenses like hospital room charges. In urban areas. with the exception of obstetrics practice. 23 . An estimated 80% of hospitals and 90% of clinics are in private ownership. At 36 days. though they realize almost all their income from public funds. whereas in rural areas clinics function as mini hospitals.1/million population compared to the OECD average of 12. clinic beds have low occupancy rates. and the number of magnetic resonance imaging (MRI) scanners is 43.e covering co-payments under NHI) and “mixed medical care” (kongo shinryo) – mixing health insurance approved and unapproved care – is highly problematic (i. With relatively few longstay facilities. Since clinics compete with hospitals for patients primarily on the basis of the perceived quality of care. the number of computed tomography (CT) scanners per million population at 97.836. there tends to be much duplication of diagnostic equipment.Private insurance Private health insurance is very limited. providing a total of 1. with the remainder owning or running clinics.3 is four-times the OECD average. some of the bed-blocking in acute hospitals is blamed on “social hospitalization” (shakaiteki nyuin). The hospital/clinic differentiation is not clear-cut. Around two-thirds of physicians are full-time salaried employees of hospitals. on a first-come-first-served basis. by large companies and by the municipalities alike). The fee schedule (shinryo hoshu) uses points for all listed activities (1 point or tensu = ¥10). A three-hour wait for a three-minute consultation is a frequent complaint. 24 . and specific sections on homecare visits. Medical care is provided without limit on presentation of the patient‟s insurance certificate to any healthcare facility designated by the governor of each prefecture. normal pregnancy/delivery. Health checks for persons under 40. patients can select any clinic or hospital outpatient department they like. anesthesia. Remuneration of providers Fee-for-service Healthcare providers are mainly paid under NHI on a fee-for-service (retrospective) basis. A common minimum package is offered under all schemes. Beside medical and dental benefits covering inpatient and outpatient care. and abortions are not covered. cosmetic surgery. Government-managed health insurance covers only those benefits specified in law. over-the-counter (OTC) medicines. psychotherapy. treatment. determined and adjusted by the Minister on the advice of Chuikyo.Healthcare benefits There is no family doctor or referral system. prescribing and dispensing. whereas health insurance societies tend to provide additional benefits. especially at university hospitals. from an outpatient department of a hospital. diagnostic tests. The fee schedule is divided into two parts: a basic section on doctors‟ consultations and hospitalization. Reimbursement for medicines supplied can also be claimed at the fixed drug tariff rates. though there are lump sum allowances paid for childbirth and burial expenses. surgery. imaging. confusingly also known as benefits under NHI (though it applies to schemes managed by the national government. allowances are paid in cash to insured persons to compensate for the loss of income due to temporary incapacitation. and nuclear therapy. Patients are generally seen without appointment. sickness or injury. Many people prefer to receive treatment. injections. even for a relatively trivial condition. rehabilitation. where they believe they will receive better care than from a clinic GP. such as vaccination and reimbursement of patient co-payments. but there are often lengthy delays. high-tech medical care relatively unprofitable. resisting the implementation of protocols or treatment guidelines. at the same time as NHI drug price revisions. the Japanese system is characterized by excessive medication and testing that is ridiculed in the popular expression kusurizuke. ordering more tests that carry a higher points value.The schedule promotes equality among physicians. The schedule is revised biennially. It does not recognize differences between private or public practice. for the very good reason that savings with the latter are used to pay for increases with the former. Billing beyond the fixed price is not allowed. but by two bodies that are entrusted to examine doctors‟ and pharmacists‟ monthly bills and to reimburse the appropriate amount. The claim for each patient lists the diagnosis. it is inevitable that many physicians “game the system” by increasing the volume of services. Medical and pharmaceutical fees under NHI are not paid directly by the insurers. Though public hospitals receive some government subsidy and preferential tax treatment. the fee schedule makes expensive. In 25 . In general. apart from acute care hospitals enrolled in the diagnosis procedure combination (DPC. all clinic and hospital income under NHI is derived from a simple equation: Volume x listed price of each service or product delivered to patients As a consequence of binding limits on fees. see below) system. and the name and volume of all drugs and services provided. or by keeping consultations brief so as to necessitate repeated office visits. are normally honored at the end of the month following that in which the service was provided. in experience or qualifications of providers. Overall. The Social Insurance Medical Care Fee Payment Fund (Shiharai Rengokai) acts on a commission basis on behalf of employees‟ insurances and the Prefectural Federation of National Health Insurance Associations (Kokuho Rengokai) for the NHI schemes. less the co-payment received directly from patients. Reimbursement claims (reseputo) by medical institutions. literally “pickled in drugs and tests”. and cheap outpatient primary care relatively profitable. prescribing more medicines. the type of facility or its geographical location. Japanese doctors enjoy substantial clinical autonomy and never have to get pre-approval for any procedure or medication. In fact. as of April 1st 2011. Drug names have to be given individually. More detailed disclosure of the patient‟s condition and symptoms are required in cases were certain high cost products. At the insistence of the JMA. Nevertheless. There are inevitably false or exaggerated claims. diagnosis procedure combination (DPC) was first introduced in 2003 for routine. were carefully selected. and some have done so as they felt financially disadvantaged under it. modeled on the diagnosis-related group (DRG) concept first adopted in the US. Hospitals are also allowed to opt-out of DPC. The principal stated objective was not cost containment. These hospitals. adoption of what was known locally as flat-sum reimbursement remained optional. only approved indications are reimbursed.000 physicians.general. This involves peer reviews boards with about 8. which for Japan had remarkably short bed stays averaging 14 days. are prescribed and claims for more than one million points are being sought. began being piloted in Japan in the late 1980s. except when these are administered at the same dosing frequency and cost less than ¥205 ($2.57. like human immunoglobulins or thrombolytics. There were also hopes the system would result in a spillover reduction in the length of hospital stay. The breakdown for 2008 is shown in Table 3. but to compare performance by different hospitals. It had little impact. The latest DRG variant. DPC hospital funding Schemes for prospective payment of hospitals.449 hospitals with a number of others in the preparatory phase (pre-DPC). Previously there had been no common system for data collection nationwide. DPC was already applied in 1. MHLW‟s target was for 1. acute inpatient care in 82 university and other large public and private specialized function (tokutei kinou) hospitals. 26 . but considerable efforts are made to screen these out by review (shinsa). at average 2011 rate) on an NHI price basis (considered as ”one type of drug”).000 acute care hospitals to voluntarily adopt DPC payment by FY2012. 3% 50. It is scaled in three stages.0% 62.978 16.2% No.627 34.027 30.9% 26.2% 56. of DPC hospitals 718 No. tend to be the larger ones.009 83.5% 8. in Japan under a DPC this fee is on a per patient.2% 63.122 34. Table 4: DPC hospitals by bed numbers.576 65.455 153. of pre-DPC beds 9.082 187. 2008 Hospital type Count/% No. of DPC beds 2.0% 58.943 2008 share of DPC hospitals 8% 2008 share of DPC/pre-DPC hospitals 16% Source: Author‟s analysis BUSINESS INSIGHTS DPC hospitals.7% Share of DPC + preDPC beds 9.521 47.428 Total number of acute care hospitals 8.488 36.523 30. The cost is not entirely fixed. per day basis. Whereas a flat fee per case or patient admission is paid under a DRG in the US or Europe.445 185.0% 76. so the impact of DPC is much greater in terms of the number of affected beds (Table 4).610 No.292 116.333 168. 27 .3% 33. 2008 Beds/hospital 0-99 100199 200299 300399 400499 >500 Total No.645 65.577 98465 246225 911014 Share of DPC beds 2.094 24. of hospitals preparing for the introduction of DPC 710 DPC + pre-DPC hospitals 1.010 143.301 121. however.651 288.984 457.482 37.691 DPC + pre-DPC beds 12.Table 3: Penetration of DPC in hospitals.1% 38. with the first phase of hospitalization at a 15% higher rate than the standard rate and stays beyond the average length of stay for the disorder at a 15% lower rate than the standard to discourage prolonged hospitalization.9% 25.4% 31. of acute beds Source: MHLW BUSINESS INSIGHTS Flat rate payment means the payment the hospital receives for treating a patient with a particular diagnosis is the same regardless of the drugs administered or laboratory tests applied.005 46. the 84th cost assuming there are 100 different costs) so more products should be able to kept out of DPC. radiation therapy. and the type of cognitive services provided (e. Payment to DPC hospitals has retained a fee-for-service component (covering surgical procedures. and procedures of more than 1. and treatment fees of less than 1.000. drug dispensing. irrespective of the actual expenditure on the patient. as well as doctors‟ fees and outpatient services. medicines use review. Dispensing fees The dispensing margin is not part of a medicine‟s NHI price.g. the length of treatment. counseling patients.Fees are linked to a particular DPC code – to cover the cost of the basic inpatient charge. though consideration is made to include them into DPC reimbursement at the next revision. dosage form.000 points). imaging diagnosis. $125 at 2011 average rate). the share originating from any one individual medical institution.000 points (¥10. The number of points per day is set higher in cases of earlier discharge than the mean number of hospitalization days of the DPC. injection fees. There were over 1. A new rule lowers the upper limit to the 84 percentile (i. home visits.e. etc). frequency of administration.880 DPC codes as of March 2010. Fees for pharmacies depend on the prescription volume per month. Excluded drugs for inpatients are reimbursed to hospitals fully at their drug tariff rate. 28 . specific high cost drugs and devices. The criterion applied used to be when their cost was more than one standard deviation above the standard cost of treatment for the relevant DPC code. anesthesia. providing written drug information. DPC tariffs are revised every two years based on actual historical costs. Which high-cost drugs can be temporarily “carved out” of DPC payments is specified by Chuikyo at the time their introductory NHI prices are set. Hospitals bill NHI monthly using the following formula: Number of points per day for each DPC x hospital coefficient x number of admissions x ¥10 The hospital coefficient is set according to the function and past performance records of the hospital. laboratory tests. whether generic substitution has been undertaken or not. Copayment levels are as follows:  infants under two years of age – 20% of the cost  those aged 3-69 years – 30% of the cost  those of 70 years and older –10% of the cost (but 30% if income is near that of the working population). 29 . The prescription drug component of the bill is not especially prominent as the total includes fees for physicians. as with other providers.The total fee is made up of a number of components. Patient co-payment Ambulatory and hospitalized patients alike are required to pay an age-dependent fixed percentage of their medical costs as a co-insurance under NHI. surgery. There are no deductibles. hospitals. is quantified as health insurance points. diagnostic tests. based on a long series of scales and. and other treatments. Table 5 shows a specimen monthly bill for a 78-year old patient receiving an antihypertensive (in generic form) who visits the outpatient clinic of a hospital twice a month (fees relate to the NHI tariff applying in 2004). 99 Pharmacist management fee 400 x 2 7.97 Dispensing fee 650 x 2 12.000 58. Parkinson‟s disease.73 Add-on for generic dispensing 40 x 2 0. 2008 (cited in Health Systems in Transition. for patients suffering from any of 45 named intractable diseases.400 ($557).com) Source: Social Insurance Daily.92 520 5.00 720 x 2 13. the ceiling itself is lowered to ¥44. multiple sclerosis.004) on co-payment liability – any demands in excess of this are reimbursed to the patient in full.12 Total pharmaceutical care 3. psoriasis and ulcerative colitis.03 680 x 2 13.93 Patient co-payment (10%) 382 3.100/month ($1. Co-payment is waived entirely for patients with specified psychiatric and neurological disorders (including bipolar disorder. WHO.4 (OandA. 2009) Catastrophic care support puts a cap of ¥80. depending on age and income. including Crohn‟s disease.Table 5: Specimen outpatient hospital bill Cost in ¥ Cost in $ 6.69 Medical care Evaluation and management fee for patients over 75 years of age Follow-up visit Other Prescription fee Total medical care Patient co-payment (10%) Pharmaceutical care Compliance management Information on generic drugs Note: 2008 average exchange rate.15 9.77 350 x 2 6. epilepsy and schizophrenia). 1$ = ¥103.820 36.77 100 0.57 Drug charge (NHI tariff rate) 420 x 2 8. BUSINESS INSIGHTS Japan. There is also a maximum outlay per month. lysosomal storage disorders.90 930 8. 30 .300 89. After three months incurring out-of-pocket expenses that meet or exceed this ceiling. seniors‟ co-payments were capped at ¥530 ($6. after which all additional consultations were free. when universal health insurance began. Even faster growth has occurred since (Table 6). In 1955. Employees of some big companies will often have the co-payment liability paid as an employment benefit. Between 1961. but the rise in out-of-pocket demands has especially hit elderly patients with chronic illnesses. State subsidies to government managed health insurance and NHI programs are calculated as a fixed percentage of outlays as established by law. when the doubling of the rate for salaried workers from 10% to 20% helped to produce the first decline in outpatient visits since records began in 1953. or 3.8% of national income.65) for each of the first four consultations per month. and come from the general account budget. Prior to 2002.8bn. and doubled again to ¥2. The Ministry of Finance must approve the amount of subsidy at each fee revision. changes in co-payment have been announced (and sometimes postponed) with some frequency since 1997. and 1965 expenditure doubled to ¥1.000bn. The employee‟s rate was increased again to its present level of 30% in 2003.Always a politically sensitive issue. Healthcare expenditure Japan does not have a formal global budget for healthcare spending set by the Diet.000bn just four years later. 31 . but the effect is the same. national medical expenditure was ¥238. consistently exceeding the growth in national income. 4 1994 25. One main driver for the healthcare cost explosion is ageing.401) of medical expenditure in FY2009.8 2006 33.582 8.000 ($1.607 5.5 1998 29.142 8.700 ($7.61% of national income.9 Source: MHLW BUSINESS INSIGHTS The latest figure.8 2008 34. compared to ¥163. 32 .7 2004 32.951 8.1 2002 30. and the average elderly person (65+) accounted for ¥687.0 1996 28.9 1992 23.007bn ($388bn).808 9.0 2000 30.111 8. was estimated at a record ¥36.128 8.Table 6: Growth in national medical costs. Japan has the fastest-ageing society in the world (Table 7).478 6.791 7. 1990–2008 Fiscal year Expenditure (¥bn) Share of national income (%) 1990 20. for FY2009.741) for the average a non elderly person. Elderly persons medical expenses now account for 55% of total medical expenses compared to 35% in FY2005.454 7. the equivalent of 10. Table 7: Number (million) and share (%) of population older than 65 years. Germany. 33 . Chronic diseases for the elderly are replacing the acute ones the NHI was set up to deal with. compared to just 310 in 1970. there were 2. A more western diet and lifestyle is producing new diseases and smoking remains common. Spain. 201222 2012 2017 2022 Japan 30 (24) 35 (28) 37 (30) US 42 (14) 50 (15) 58 (17) 5EU 59 (19) 64 (20) 69 (21) Note: 5EU = France. Italy. a record number of 48. UK Source: US Census Bureau BUSINESS INSIGHTS The birth rate is declining and in 2001 the population total fell for the first ever time. By mid-2011. and the proportion of the elderly is seen to rise to a peak of 40.5m today.5% by 2055 when the total population is expected to be just 90m compared with 127.25m females and 850.000 centanarians were recorded as living in Japan. were aged over 65 (compared to just 5% at the time of the first census in 1920). or 26m people. Over one-fifth of inhabitants in 2005. Japan also has a record number of the very elderly.000 males aged 85 and over by end 2006. only medicines (brand or generic) listed in the NHI drug tariff can be prescribed. There is no limit to the number of patent extensions for new indications or changes to the manufacturing process. 34 .  New drugs which represent the first. This method sets the price by reference to the NHI cost of an existing product. Generics are subject to an abbreviated process with a target review time of 10 months. second or third entry in the class and are within three years of first entry to the class are priced by similar efficacy comparison. There are additional premiums for innovativeness.  For inpatients and outpatients alike. These are priced according to the class average price with no possibility of added premiums or foreign adjustment. through biennial price revisions.  MHLW attempts. The aim is to publish the NHI price within 60 days of regulatory approval. usefulness. Regular across-the-board NHI price cuts on April 1st have been a feature of the market for over 50 years. to bring tariff prices closer to market levels.  If a new drug is the fourth or later entrant to its class it may be considered to lack novelty and be classified as a “me-too”.  Additions to the NHI drug tariff for new drugs are made four-times a year.Chapter 2 Regulatory environment Summary  New drugs benefit from 20 years‟ patent protection. with reimbursement limited to tariff rates. pediatric use or small market size. There is a maximum five-year patent term extension to compensate for the period needed for clinical development and regulatory review. A new reimbursement price is obtained by adding the discount allowance (known as the adjustment zone) – 2% of the pre-revision NHI price – to the weighted average market price as measured in biennial surveys.  Examination for marketing approval is performed by the Pharmaceuticals and Medical Devices Agency (PMDA). was due to 35 . Following a case brought by Takeda. and ends on the day before marketing approval. 0605014 of MHLW‟s Evaluation and Licensing Division dated 5 June 2009. The drug‟s basic patent. with Notification No. the Supreme Court ruled in April 2011 that the patent term of a drug delivery system preparation containing existing active ingredients for existing indications could be extended. partial approvals of indications or dosage and administration not covered by the patent became permitted.e. Generic manufacturers complain about patent “evergreening” (i. The JPO is now working out a rule for this. There is no limit to the number of patent extensions. the patent holder obtains separate 20-year patents on multiple attributes of a single product). giving the length of extension period required. The period of the patent term lost to patent examination delays or devoted to pre-clinical testing is not considered. Repeatedly adding a new indication or manufacturing method effectively prolongs the patent life as no generic application can be filed until the last patent extension term ends. Applications by patentees. The responsible body is the Japan Patent Office (JPO).e. multiple related patents can be extended multiple times.Intellectual property protection Product patents of 20 years‟ duration from date of filing were introduced in 1976 and cover medicines. Generics will not be approved for marketing until the substance patent has expired. The extension period commences on the day when clinical trials start or the day when the patent is registered. should be made to the Patent Office before the patent becomes invalid and within three months from marketing approval. A maximum five-year patent term extension was added in 1988 to compensate for “the period which the patented invention could not be worked” (i. the sum of clinical study and regulatory review time). The situation with levofloxacin has been cited by the generic industry as an example of the problem it faces. However. whichever is later. filed in 1990 citing use against staphylococci and 30 other bacteria. Also. If some of the indications or dosage forms of a product were patented. marketing approval as a generic was originally not granted to unprotected indications or dosage forms of the same product. There is provision in law for the grant of a compulsory license. continue after approval  Eight years for other drugs containing new molecular entities (NMEs)  Six years for new prescription combination drugs. etc. the Japanese Supreme Court in 1999 ruled that bioequivalence testing of generics during the life of a patent was an experimental use exception provided by Section 69(1) of the Patent Act. the original levofloxacin brand. and for drugs for which clinical studies to set pediatric doses. but a series of applications for use against anthrax. akin to the situation in the US and the EU. was launched in November 1993. this would be prohibitively expensive for generic firms and hence the re-examination period also becomes a period of data exclusivity. Trade and Industry. but abbreviated applications for generic versions of brands under regulatory re-examination for efficacy and safety are not allowed. a competitor could at any time submit its own set of safety and efficacy studies and request approval. However. While there is no “Bolar provision”. While in theory. Generic companies have lobbied the Patent Office to limit patent extensions to only one patent and a single extension. Cravit. 36 . the re-examination period is:  10 years for Japan-designated orphan drugs. by the Commissioner of the Patent Office or by the Minister of Economy. typhoid/paratyphoid and legionella extended the patent life to June 2011.expire in June 2006. there are no cases of a grant of an award to date because all cases have been withdrawn before decision on an award could be reached. The company received marketing approval for 500mg/100ml IV bags and 500mg/20ml IV injection forms of Cravit in October 2010. In accordance with Article 14-4 of the Pharmaceutical Affairs Law. for drugs requiring a comprehensive evaluation utilizing pharmaco-epidemiological methods. and for drugs with new routes of administration  4–6 years for drugs with new indications or new dosage schemes. if a patent has not been worked by its holder which then refuses to discuss granting a non-exclusive license. There is no data exclusivity period either. other than orphan drugs. 2008. vol.31 years (Masuda S. Regulatory review for all medicines. the frequency of tariff listings for new generics was doubled from once to twice per year. If an original brand is subject to post-marketing surveillance demands by the regulatory agency then the molecule and hence any generic version of it are too. more akin to marketing authorization for the product and manufacturing authorization for the producer found in the west. for example. The mean patent extension period was 4.The standard re-examination period for NMEs. 37 .33 to 19. This happened with simvastatin. 041001 of 1 April 2007). 2: 121-130). In the case of 80% of originator brands. In the case of generics. Analysis had revealed most prescribing revisions to a drug‟s label were made 5–8 years after first approval. including generics. 5. application is made to the Group Responsible for Generic Drugs within the PMDA‟s Office of OTC and Generic Drugs. Its organization and procedures are summarized in Pharmaceutical Administration and Regulations in Japan published by the Japan Pharmaceutical Manufacturers Association (see references). was extended from six to eight years in April 2007 on safety grounds (MHLW Notification No. Iyakuhin Iryoukiki Sogo Kiko) since 2004. Journal of Generic Medicines. leading to a spate of plant rationalizations by pharmaceutical companies and fierce competition between contract manufacturers.13 years. has been carried out by the Pharmaceuticals and Medical Devices Agency (PMDA. paclitaxel and itraconazole. As a trade-off to the generics sector for this extension. the determining factor for generic entry is the length of the patent not its re-examination period. A survey of the effective patent life (EPL) enjoyed by 224 new drugs approved since 1998 (345 patent rights and 553 extension registrations) found a mean EPL of 11.74 years. Marketing approval Under a 2005 revision to the Pharmaceutical Affairs Law ”manufacturing approval” was switched to ”license for manufacturing/marketing” and “license for manufacturing only”. with a range of 5. More than half (125 drugs) had an EPL between 10 and 14 years. The change made it much easier to contract out part or the entire manufacturing process. while in the case of 14 drugs (6%) the EPL was less than eight years. no. PMDA deals with re-examination. Assuming the active pharmaceutical ingredient (API) has a registered drug master file. pharmacological action)  Guidelines for bioequivalence testing of oral generic products and topical generic products are published by the NIHS (see references) Dissolution testing for oral tablets and capsules  The curves must be within the limits shown by the originator 38 . efficacy and safety.g. an abbreviated data package is accepted in an application to market a new generic medicine.As well as approving all drugs and medical devices. clinical trial approval. Good Laboratory Practice (GLP). clinical equivalence should be confirmed by other means (e. Good Clinical Practice (GCP). and manages the fund for adverse drug reaction relief. Good Manufacturing Practice (GMP). applying the following tests: Specification and test methods  API and impurities must be equivalent to the originator  3 different batches tested  Results of validation of testing methods Stability  Samples from 3 batches subject to 40oC(±1o)/75% relative humidity (±5%) storage for 6 months Bioequivalence  Crossover trial in healthy adults  If pharmacokinetic profile of the drug cannot be measured. the aim of the assessment is to assure the equivalence of the generic to the originator brand in terms of quality. As in other countries. re-evaluation of drugs approved before 1967. Suppositories Melting point test. Particle size distribution test. Aerosols (requiring quantitative accuracy) Relationship between spray time and spray amount. 39 . Particle size test (suspensions only). Test for extractable volume. Particle size test. been comfortably met over recent years (table 8). Softening point. Dissolution test or disintegration test.Table 8: Specifications required for generics by type of formulation Type of formulation Tests required Tablets. Transdermal systems Adhesiveness test. Uniformity of dosage units. Particle size test. Sterility test. Release test. Sterility test. Dissolution test or disintegration test. Prior consultation with the PMDA reviewers is also available for a supplementary fee. Ductility test. Release test. fluid extracts Alcohol determination. Release test. Application fees are not returned if an application is withdrawn. troches Uniformity of dosage units. on average. Release test. Release test. Bacterial endotoxins test or pyrogen test. as well as a GCP audit of bioequivalence facilities. granules Uniformity of dosage units. tinctures. Powders. Insoluble particulate matter test. pills. methods and results. Ophthalmic ointments Test for metal particles. Injections Foreign insoluble matter test. Ophthalmic solutions Foreign insoluble matter test. The target regulatory review time for new generics of 10 months has. spirits. Particle size test Source: PMDA BUSINESS INSIGHTS Pre-approval and periodic post-approval GMP inspection of the manufacturing site are required. capsules. Elixirs. Sterility test. Though PMDA has often been criticized for taking an overly bureaucratic approach. Actavis. By March 16th.5 5.3 4 4. Aska asked Actavis on March 14th if it could help. with product samples and further documents following over the next few days. continuation of supplies of levothyroxine tablets to the market was jeopardized. just 20 days after the initial request was received.Table 9: PMDA review times for new generic applications. 2005–09 2005 2006 2007 2008 2009 No. By March 31st. of applications approved 1782 2029 3228 1960 3245 Median review time (months) 7. produced both tablet strengths (50mcg and 100mcg) of levothyroxine that were needed at its UK facility in Barnstaple. 2011 earthquake and tsunami in north-eastern Japan damaged a production plant of generic company Aska. the combined efforts of both companies resulted in the accreditation of the Barnstaple site and the product‟s emergency approval. even though the generic launch is not scheduled until after patent expiry. 40 . no marketing exclusivity is granted to a generic company that is first to file a patent challenge. it has fast-tracked generic applications when faced with real medical need. After the massive March 11th. the first parts of the dossier were filed with PMDA in order to obtain emergency registration.3 7. Ten million tablets in UK packs were dispatched from the UK and arrived in Tokyo on April 4th. Unlike the US.5 Note: covers applications filed after April 2004 only Source: PMDA BUSINESS INSIGHTS Regulatory approval will not be granted during patent validity. Knowing its joint venture partner in Japan. NHI drug tariff Under the Health Insurance Law, medical benefits include the supply of medicines For any drug – original brand or generic - to be prescribed by a doctor in a GP clinic or hospital under a company-affiliated health insurance scheme or the NHI system, that product and its reimbursement price has to be listed in the NHI drug list or tariff (yakka kijun). As one of the terms of service under NHI for medical institutions and physicians it is specified they “shall not use any drugs other than those designated by the Minister of Health, Labor and Welfare”. Published by MHLW, the drug tariff is a list of those drugs. As of 1 April 2010, it contained 15,455 presentations, with a breakdown by route of administration shown in Figure 1. Figure 1: NHI drug list by route of administration, 2010 Dental, 36 External, 2733 Oral, 8676 Injectable , 4010 Source: MHLW BUSINESS INSIGHTS Products are generally listed under the brand name under which they receive their marketing approval. However, some drugs with monographs in the Japanese Pharmacopoeia as well as biological products may be listed at uniform prices by their active ingredients, formulation or specification. These include some lowprice generics listed as “[active ingredient name]-GE”. 41 Listed prices include a form of value-added or sales tax. Known as consumption tax (shoi zei), it is levied on all medicines at the standard rate of 5%. This rate is scheduled to be doubled to 10% in steps by 2015. There is no negative list as such, and exclusion from reimbursement is done on a case-by-case basis. NHI does not cover preventive care (thus ruling out the likes of oral contraceptives), over-the-counter medicines for self medication (OTC-yaku) or lifestyle drugs (seikatsu kaisen yaku). Some vaccines are covered, but not through the Health Insurance Law. In August 2010, MHLW introduced a system to grant NHI coverage prior to regulatory approval in the case of marketed drugs used off label, when there was information in the public domain to support important new indications. NHI price setting For innovator products, the launch price is set by negotiation between the marketing company, MHLW and an independent expert body, the Drug Pricing Organization (DPO). The company first files supporting data with the MHLW‟s Health Policy Bureau. This liaises with the payer body, MHLW‟s Health Insurance Bureau, and a recommended price is sent to the DPO which makes the final decision after a hearing with the applicant. Most new drugs are priced by similar efficacy comparison (ruiji yakko hikaku hoshiki), by reference to the usual maximum daily NHI cost of an existing similar product. The price comparator has to be:  currently marketed in Japan and reimbursed under NHI  similar to the new drug  included for the first time in the NHI tariff during the previous 10 years and without generic versions. Similarity is judged relative to:  indications  mode of action 42  other pharmacological effects  therapeutic class  chemical structure  route of administration  dosage form  outcomes. Additional price premiums are possible on top of the comparator‟s daily cost if the new products shows innovativeness, clinical usefulness, has a small potential market or is indicated for pediatric use. “Me-toos” (zoro-shin) – when the new drug is a fourth or later entrant to its class and comes more than three years after first entry to the class - receive the class average price with no possibility of price premiums. Truly innovative new drugs without comparators are priced by cost calculation (genka keisan hoshiki). In the final step of the pricing process, the calculated price may be increased or decreased with reference to the average foreign price (subject to a number of conditions, the simple average of the public prices of the same presentation in France, Germany, UK and US). Prices may be adjusted upwards if they are less than 75% of the average public price for the product in France, Germany, UK and the US. Prices can also be subject to downwards adjustment if they are 150% or more of the average in the same four reference countries. It is noteworthy that results of any health economic evaluation are not considered in the Japanese process. Turning to combination drugs, new fixed dose combinations receive 80% of the sum of the daily costs of the individual ingredients as monodrugs. Additions to the tariff with originator brands are made in batches four times a year (in March, June, September and December, or in April instead of March if price revision year), normally within 60–90 days of regulatory approval. Line extensions of existing products, known as “reported product” are listed in May and November each year. 43 4% when it was last measured in September 2009. sometimes referred to as the “doctor margin”. It is supposed to cover technical fees and inventory costs for distributors.e. with the wholesale price set freely by market participants. This follows a comprehensive market price survey the previous autumn. Launch is required to be made within 90 days of tariff listing NHI price revision processes Biennial revision An important aspect of the pricing system is that the MHLW regulates only the NHI or reimbursement price. and many hospitals claim they would run financial deficits without it. i. clinics and pharmacies always try to purchase prescription medicines at prices lower than the tariff rate. The more severe the price competition in the therapeutic class. From a peak of more than 23% in 1989. the larger the margin between the wholesale price (jisseika) and the reimbursement price (yakka). The new reimbursement price is calculated by adding the A-zone allowance to the weighted average market price obtained in the survey and allowing for the effect of consumption tax. MHLW‟s objective is both to achieve direct savings on the drugs bill and to squeeze the yakka-sa.3% in 2003 before rising to 8. This “drug price margin” (yakka-sa). Hospitals.: New NHI price = (weighted average value of market price in survey before tax) x (1 + consumption tax rate) + discount allowance. As has become the norm on April 1st every second year. it is now known as the A-(or adjustment) zone. 44 . The margin is an important part of provider income. the price will be cut by the difference. reimbursement prices in the NHI tariff are brought closer to actual market prices by means of a price revision process (yakka kaitai).The NHI price per dosage unit (derived from the maximum daily dose) and the basis for this is published on the MHLW‟s website on the second Friday of the month following review by DPO. The discount allowance was originally known as the R-(or reasonable) zone. If the survey reveals a product‟s weighted average selling price to be below the acceptable discount allowance of 2% of its pre-revision NHI price. the average yakka-sa fell to a low of 6. can be retained by the purchaser as there is no “clawback”. otherwise the revision is based on market prices. because of the inter-strength formula that is used to price supplementary strengths by reference to the standard one. Once a new -invariably reduced . are set at a minimum level (e.455 listed presentations. 45 . which are adjusted at the same time as drug prices.4% on April 1st 2010. according to IMS.895 had prices unchanged. such as those listed in the Japanese Pharmacopoeia.With an average yakka-sa of 8. an originator‟s price has fallen so far that generics have little room for competition on price. Prices of basic. NHI drug prices were cut across-the-board by an average of 6. essential medicines.) and are therefore artificially supported. further discount negotiations lay the basis for the next round of tariff cuts in a seemingly endless cycle that has been regularly repeated for more than 50 years. By the time of patent expiry. most damagingly since 1981.g. Of the 15. These are brought up the minimum level at the next price revision. Japan is unusual in that almost half of total lifespan sales of a brand come in its post-patent expiry period. Sometimes.6. Increases are awarded to low-priced products if it can be demonstrated that rising costs make continued production and supply otherwise unsustainable. Long after patent expiration.6. one tablet/capsule cannot be lower than ¥9.514 or 87% were subject to price decreases.4% and a 2% A-zone. etc. the prices of 1. one injection vial ¥92. Sales of brands no longer protected by patent in Japan in 2007 recorded a 43% market share of the molecule (the equivalent share in the US was 10%). 5ml eye drops ¥85. 13. The next across-the-board revision is due on April 1st 2012.price is listed in the tariff. The biennial price revision process has also been a factor in limiting market penetration by generics. it is possible for some products to fall below minimum price levels. MHLW uses the savings from the price cut to pay for increases in medical fees. Yakka-sa demands can only reasonably be resisted with truly unique products. original brands can be useful cash cows for their manufacturers. and 46 had price increases. defined as double or more the sales forecast at the time of initial listing – which was within the previous 10 years – and exceeding ¥15bn/year on an NHI basis.3% of the total volume of prescription drug use. with marketed generic versions are known as long-listed brands. single source drugs at just 18. By way of contrast the same 2009 survey recorded the volume of patent-protected. after expiry of the patent and/or the regulatory re-examination period. Long-listed brands Originator products. with several major domestic companies highly reliant on their sales (table 9). upwards repricing can apply only to generics regardless of the profitability situation with the corresponding originator product. This can happen in two circumstances:  For products initially priced by cost calculation when there is a significant increase in sales volume compared to original estimates. Upwards repricing (price increases) may apply to a few low-priced products considered necessary for medical care if it can be shown that rising costs make supply otherwise unsustainable.  When there are changes in the original conditions for pricing by comparison with a reference product. including usage and the target patient group. The maximum reduction is capped at 15%. according to MHLW‟s September 2009 drug price survey (compared to 34. 46 .8%. so that there is a considerable increase in market size as defined above. These accounted for 36. The maximum reduction is capped at 25%. If supply of generics is jeopardized by unprofitability.9% in September 2008).Repricing A second potential component of the biennial reduction process is repricing. and the similarity with the drug selected for comparison (which was within the previous 10 years) has disappeared. Gaster (famotidine) Eisai 16 Selbex (teprenone) Chugai (Roche) 16 Alfarol (alfacalcidol). Bezatol (bezafibrate) Daiichi Sankyo 54 Mevalotin (pravastatin). Omnipaque (iohexal) Mitsubishi Tanabe 40 Anplug (sarpogrelate).Table 10: Share of product portfolio of Japanese R&D companies accounted for by long-listed brands Company % long listed brands Hisamitsu 94 Mohrus (ketoprofen) Ono 85 Onon (pranlukasy). Flumetholon (flurometholone) Nippon Shinyaku 58 Hypen (etodolac). Palux (alprostadil) Dainippon Sumitomo 69 Amlodin (amlodopine) Santen 66 Hyalein (sodium hyaluronate). Tanatril (imidapril) Shionogi 37 Flomox (cefcapen). Sigmart (voglibose) Source: Inoue Leading examples BUSINESS INSIGHTS MHLW views market price competition to original brands from generics as ineffective and. Vancomycin (vancomycin) Kyowa Hakko Kirin 34 Depakene (sodium valproate). Kinedak (epalrestat) Taisho 70 Clarith (clarithromycin). Basen (nicorandil) Astellas 21 Harnal (tamsulosin). 47 . since 2002. it has targeted long-listed brands approved on or after October 1st 1967 with special price reductions on top of the regular biennial revision “as correction for the effect of replacement by generic product” (Table 11). Selectol (celiprolol) Kissei 55 Utemerin (ritadrine). Coniel (bendipine) Takeda 32 Takepron (lansoprazole). The exact reduction depends on the originator brand‟s regulatory approval date:  (i) October 1st 1967 to September 30th 1980: 4%  (ii) from October 1st 1980 onwards when the discount allowance was set at 8% in the 1997 price revision or at 2% in the 1998 price revision: 5%  (iii) from October 1st 1980 onwards in cases other than in (ii) above: 6%.2 Source: Author‟s research BUSINESS INSIGHTS The initial reduction takes place at the first biennial revision after the first generic has been added to the tariff. Excluded from either the first generic or established generic cuts are originator products in the following groups:  drugs listed in the Japanese Pharmacopoeia by Japan Accepted Name  biological preparations (including blood preparations) 48 .Table 11: Additional price cuts for long-listed brands.2% reduction in 2010 was specifically applied to fund the new premium for new drugs/new indications (see below). The 2. In two of the revisions since 2002 further additional price cuts have been levied on long-listed brands that have faced generic competition for several years. 2002–10 Year Range of additional price cut for originator (%) after first generic launched Further additional price cut for originator (%) with established generics 2002 4–6 0 2004 4–6 0 2006 6–8 2 2008 4–6 0 2010 4–6 2. the highest to date. though this is expected to change (see chapter 10). initially on a trial basis. Correction premiums Biennial market price revision or repricing cuts may be offset in part or full by “correction premiums” in the following situations:  when a pediatric indication has been newly added since April 2008  when an orphan drug indication has been newly added since April 2008  if the drug‟s clinical usefulness has been objectively verified by data accumulated in post-marketing studies and published in a well-known academic journal. Drugs repriced at the same revision following market expansion as well as oral fixed-dose combinations were excluded This last named was newly added in April 2010. Chinese herbal medicines (kampo yaku)  Japan-designated orphan drugs  products fulfilling the criteria for unprofitable drugs  brands priced lower than their generic equivalents. 113 original branded products (42 active ingredients). including Campto (irinotecan). in which one of the ingredients has gone generic but the other hasn‟t. facing established generic competition.5% cut). with no marketed generics and with a yakkasa below the weighted average yakka-sa of all listed drugs. 1. received an additional 2. facing generic competition for the first time. The reduction penalty is halved for products listed in the Japanese Pharmacopoeia by brand name. Cravit (levofloxacin). The 49 . It was designed as a trade-off for MHLW requiring companies to develop new drugs and new indications of existing drugs for Japan. are not currently considered as long-listed drugs. Fosamac/Bonalon (alendronate) and Norvasc/Amlodin (amlodipine).2% price penalty (resulting in an average 8. Originator fixed dose combination products. For originator products less than 15 years from first tariff listing. were subject to a 4–6% reduction in April 2010 on top of the normal revision rate based on market prices.472 long listed products (513 active ingredients). 4%) minus the A-zone. but MHLW soon started discussions with certain companies on R&D commitment going forward. Furthermore. or 5. regardless of whether or not these companies had been in receipt of premiums for new drug creation.1%. the originator‟s NHI price would be reduced in a single step by the total premium received during the protected period in addition to the ordinary biennial price cut. it meant that only qualifying products with a yakka-sa of 6. MHLW had received much criticism over the years from industry about Japan‟s “drug lag”.formal title to the premium was “premium for promotion of new drug creation and resolution and resolution of unapproved drugs/indications”. however. Its effect.not prevent . For budgetary reasons.the price cut an originator brand receives during its commercial lifespan in Japan. a sum that was clawed back from the industry through the price cut on established long-listed drugs. It is referred to as “premium for new drug creation” hereafter The pharmaceutical industry has lobbied since 2006 for the introduction of a price maintenance system under which prices of innovative medicines would be sustainable during their patent life/regulatory reexamination period. A total of 624 products (337 active ingredients) marketed by 89 companies received the premium. will be to delay . the process was not allowed to result in any product getting a higher post-revision price than its pre-revision one. At the biennial revision following launch of the first generic version. Whilst the authorities had made improvements to the 50 . Nevertheless. equivalent to one-third of all originator brands in the tariff not facing generic competition at the time. with prices thereafter reflecting market competition.8% or less would see NHI prices retained in full. the premium for new drug creation at the April 2010 revision was fixed at 80% of the weighted average market variation in September 2009 (8. As the premium was applied to the post-revision price rather than the pre-revision price. The total first-year value to companies of retaining higher NHI prices was estimated as ¥60–70bn ($750–880m. Almost half (303) of qualifying products had their pre-revision price fully maintained. the innovative industry being able to retain higher early sales revenue is hoped to result in more and earlier reinvestment into innovative R&D. The new premium goes some way to achieving this. Premiums offsetting the April 2010 downwards revision came without preconditions. Confirmation of therapeutic necessity was made by the Review Conference on Unapproved or Off-label Use Drugs of High Therapeutic Needs. companies were asked to review data on file to see if any product/new indication could be made approvable without the need for new clinical trials.clinical trial and regulatory review processes they felt that companies should also share some responsibilities. and sought sponsors for the remaining 17. even those who failed to benefit from the new premium. a special price cut would be applied to return any increase in the sales of the product(s) receiving a premium plus 5% annual interest. and MHLW refined the list to 108 needed items. As a first step. It asked specific companies to develop 91 of these. MHLW warned. 51 . In addition. The list originated from requests made by academic societies and patient groups. Individual requests were made by MHLW to manufacturers to develop their “off-label” products/indications for Japan comparable to their status in western countries. is known to have refused. No company to date. Failure to respond in an adequate and timely manner to MHLW requests would result in none of that company‟s products receiving a premium for new drug creation at the subsequent NHI price revision (April 2012). includes special adjustment of long-listed drugs e – for “long-listed drugs” f – includes repricing.5 (-9.6 - 1985 -6 - 1986 -5.4a - 1990 -9.2 ) 2010 -5.4 ) 1996 -6.9 (-5.5 ) a .2 ) 2006 -6.3 ) 2004 -3.75 (-6.4% reduction due to increase in consumption tax b .5 ) 11 1997 a -4.7 ) 5 (2 ) 2000 -7 2 2002 c 2 d 2 c 2 c 2 f 2 -4.4 10 (8 ) b e e 1998 -9. long-listed adjustment and premium for new drug creation Source: Author‟s analysis BUSINESS INSIGHTS 52 .6 (-7.includes extra 1.1 - 1988 -10.includes special adjustment of long-listed drugs and repricing d .includes effect of repricing high-selling drugs c .6 - 1983 -4.2 - 1992 -8.9 - 1984 -16.Overall impact Table 12: NHI drug price revisions since 1981 Year Average change in NHI prices (%) Discount allowance (%) 1981 -18.7 ) 2008 -4.0 (-6.8 (-4.1 15 1994 b 13 b -6.6 (-6.2 - 1989 +2.8 (-8.  Pharmacists obtained supplementary fees for dispensing generics (2 points or ¥20) and for counseling patients on generic use (10 points or ¥100). up from a small fixed copayment. quality and cost reduction benefit of generics to a patient as long as this action led to a generic product being dispensed. Renivace. 2001  elderly patients required to pay 10% of medical costs. Mevalotin. including drug costs. according to the Ueda Pharmaceutical Association. Notification of substitution to the prescriber was required. 1994  GMP became a requirement for manufacturing approval  out-of-hospital prescriptions allowed to be written by INN. This latter “information provision increment” was provided each time a pharmacist provided information on the existence. Panaldin.Generic encouragement measures by government The following section sets out the progression of generic encouragement measures from 1994 to 2010. were: Gastar. those directly administered by the government) were instructed to use generics.25) was paid to doctors if they wrote a prescription for a generic brand or by INN (provided that a generic existed for that active ingredient). Baysen. 2003 53 . Myonal. Loxonin. 2002  A “prescription fee increment” of two points or ¥20 ($0. and Alfarol. Selbex. 1999  guideline on bioequivalence testing of generics introduced.  National hospitals (i. 1997  quality re-evaluation based on dissolution test results instigated. Methycobol. The top-10 original brands to be substituted.e. $0. diagnosis procedure combinations (DPCs). 54 . whereby the prescriber specifically authorized generic substitution by signing and applying his/her personal hanko stamp in a box on the prescription form  extra two points (¥20. Additional data requirements for package inserts include:  results of bioequivalence study  reference product  results of dissolution testing  summary of stability test results. As a result. Applications for new generics should use as nomenclature the Japan Accepted Name + company name + dosage form + strength. A requirement for stable supply was introduced (with ban on new NHI price listings as penalty). 2006  “tick in” generic substitution introduced. generic companies must:  manufacture and supply continuously generics for at least five years  assure sufficient stock to quickly respond to orders  establish nationwide sales networks  supply adequate information to doctors and pharmacists  establish a system to handle complaints on supply problems  prepare regular reports to MHLW on supply status. for funding 82 major teaching hospitals under NHI meant replacing fee-for-service remuneration with fixed payments for inpatient care. 2003 marked the introduction of a prospective payment system.25) for doctor if he/she allows substitution. March 31st 2013).7% to at least 30% by end 2012 (i. called for generic volume share to increase from the then present level of 18.e. must supply that product (mandatory from 2008 for new generics and mandatory for NHI listing by July 2011 for all generics. 55 . the revised text shall promptly be sent to the PMDA so that it is shown on its website  all customers to be supplied with complete listing of generic suppliers  injection forms added to tablets in ongoing generic re-evaluation program  all professional use medicines. would save ¥500bn ($4bn at 2007 average rate) over those five years. irrespective of the market share or profitability of a particular strength). including generics. a government report. which amounted to a two-thirds increase. required to carry RSS barcodes by September 2008.In order to ensure that substitution can be achieved. Achieving this target. 2007 “Basic Policies for Economic and Fiscal Reform”. every generic manufacturer that markets a particular dosage form of all strengths marketed by originator. A subsequent MHLW Action Program required:  manufacturers to deliver orders to wholesalers within one day and the latter to hold as a minimum one month‟s stock  training of generic company medical representatives to be improved  provision of quality test and stability test results to medical professionals  improvement in package inserts  public education on the benefits of generics to be stepped up  when the item “precaution in use” is revised. it was hoped.  A Task Force for Generic Quality Information within the National Institute of Health Sciences was created as a MHLW initiative to boost confidence in generic medicines among healthcare professionals and the public. The wording of the directive was modified after complaints in the media that the government was treating poor people like second-class citizens. but in May and November from 2009 . As of November 2011. pharmacists. 2010 The additional “generic preparedness” pharmacy fee was considerably increased and at the same time modified to reward pharmacies which have less than 30% historical generic dispensing rate: 56 . this counted towards total generic prescriptions.in July and in November in 2008. generic listing was an annual event (every July). commissions testing by municipal laboratories. though if there is more than one no extra credit was given). the pharmacist may select any generic equivalent for the prescribed product(s). subject to getting the patient‟s permission. From 1994 to 2006. Consisting of 10 members (academics. the Task Force had examined about 360 samples and detected only one quality failure.  MHLW notified local governments that the then 1. The ¥40 fee applied also to prescriptions filled that contained no generics. (If just one dispensed item on a prescription form was a generic.compared to four-times-a-year for innovative brands. industry) it selects test targets. with new additions only made every two years prior to 1994. 2008  “Tick out” substitution replaced “tick in”.  As a “generic dispensation preparedness increment”. evaluates and disseminates the results to health professionals. If the doctor did not sign/apply personal seal to the “no substitution” column of the form.New generics tariff-listed twice a year .50) for each item dispensed as long as they used generics to fill 30% of prescriptions received over the previous three months.5m welfare recipients who were entitled to free medical care must only use generic medicines. pharmacists gained an additional four point fee (¥40.  Poster and pamphlet campaign by MHLW to increase generic awareness by the public and dispel myths and misinformation. $0. 76) premium per admitted patient was added to the basic fee for inpatient care under the fee-for-service system for the first day of hospitalization. In order to be eligible for the fee. Note the new rule requires the generic dispensing rate to be calculated on the basis of dispensing volume in terms of pricing units (tablets. $1. providing at least 20% of products on the hospital formulary were generics and the formulary committee could select their appropriate use through a system of gathering information on generic quality. vials. stable supply.  Municipal governments. (b) the patient consents to the switch after an explanation is provided. Posters should be prominently displayed at such hospitals declaring the active use of generics. for products 57 . 17 point (¥170. $0. $2. safety. etc. and (c) there is a pre-existing agreement on substitution between the prescriber and the pharmacy concerned.  Substitution of generics with different strengths (e. in their capacity as insurers under NHI. whereas the 2008 rule it replaced was calculated on the basis of the number of prescription forms filled with at least one generic.g.13) extra fee per item if 30% of dispensing volume with generics  13 points (¥130. pharmacies are required to have posters in and outside their premises informing customers that they are promoting the use of generics. MHLW abolished the so-called “2. capsules instead of tablets) was allowed providing the drug cost is the same or less than the substituted product. This rule supported a minimum price for generics listed by their non-proprietary names.5 rule” first introduced at the time of the 1990 NHI revision.63) extra fee per item if 25–29% of dispensing volume with generics  six points (¥60. $3.g. urged “health insurance doctors to strive to use and allow the patient to choose in an easy manner generic medicines when it comes to prescribing and administering medicinal products. Inconsistent government policies Some other changes by the government went against generics:  In 2002. A total of only 1. capsules.520 hospitals qualified to receive this premium in FY2010. etc.75) extra fee per item if 20–24% of dispensing volume with generics. 2 x 5mg tablets instead of 10mg) and formulations (e.”  A 30 point (¥300.). At the same time in 2008 that pharmacists first gained their generic dispensation preparedness fee.  The data exclusivity period for most new drugs was extended in 2007 from six to eight years (with biannual NHI listing of new generics as a trade-off).with a price difference of at least 250% between the most expensive and cheapest synonyms. doctors lost their 2 point payment (¥20. Because of the change.50) on each occasion they allowed substitution with generics to take place.5 (or 40%) below that of the highest-priced version. $0. many generics suffered much heavier NHI price cuts at the 2004 revision. the lowest reimbursement prices were reset at a level 1/2. 58 . some falling to as little as 15% of the originator‟s price.  Almost all distribution of prescription medicines (except some generics) goes via wholesalers. 59 .4%.6bn ($101bn) at NHI prices. self-dispensing GP clinics for 20%.  Community pharmacies accounted for 50% of the 2009 total. Forty four of these are members of the Japan Generic Medicines Association (JGA).Chapter 3 Pharmaceutical business environment Summary  Sales of all prescription medicines in 2010 amounted to ¥8. large hospitals for 22. are of increasing importance as the volume of in-house dispensing by hospitals and by GP clinics declines due to the success of the government‟s long term policy of bungyo (the separation of the functions of prescribing and dispensing). Pharmacies. though funded by some generic companies.7% market share. Combined they held a 32. and medium-small hospitals for 7.  Over 80 of the 378 firms with products listed in the NHI drug tariff are generic companies. The Japan Society of Generic Medicines (JSGM).  Ten of the top-20 pharmaceutical companies by sales in 2010 were of foreign origin. almost the same as the top-10 Japanese-origin companies.6%. especially chain pharmacies. is an academic body independent of the sector.873. 8 44.8 24. the Kanto region (greater Tokyo) accounts for 31% of total sales.9 21.4 22. and a demand by consumers for access to the latest technology.9 24. Kinki (greater Osaka) for 16%.3 7.6 20. the Japanese market for prescription medicines is the second-largest in the world.2 41.Pharmaceutical market Valued in calendar 2010 at ¥8.8 8.6bn (at NHI prices). Reflecting the population density in major urban areas. Following the steady implementation of bungyo (the separation of the functions of prescribing and dispensing).9 25.6 9 8.873.6 21. 1992–2009 Market sector 1992 2004 2005 2006 2007 2008 2009 Large hospitals (>200 beds) 40.4 22.6 32.4 23. a large R&D-based industry presence. 60 . the approximate equivalent of $101bn.8 21. showing a tenfold increase in market share over 17 years (Table 13) Table 13: Market share evolution (%) by customer type.9 7. fee-for-service remuneration of providers.4 21 9. community pharmacies now account for the largest share of total sales.3 20. driven by a number of factors including universal health insurance.1 48.7 50 Medium/small hospitals (<199 beds) Self-dispensing clinics Community pharmacies Source: Takeda BUSINESS INSIGHTS The leading therapy classes and best-selling individual brands in 2010 are shown in Figure 2 and Figure 3. Per capita consumption of medicines is high.8 43. ageing of the population. and Tokai (greater Nagoya) for 11%.8 47.2 20 5. 400 200 100 0 Source: IMS Japan website 61 329 3.3% 288 3.4% 293 3.7% Antidiabetics (A10) 300 330 3.8% Calcium antagonists (C08) 500 Systemic antibacterials (J01) 600 Antacids/anti-ulcerants/anti-flatulence (A02) 621 7.1% Anti-asthma & COPD products (R03) 430 4.7% Antithrombotic agents (B01) 390 4.0% Lipid-lowering agents 700 Antineoplastics (L01) Renin-angiotensin system agents (C09) Sales $m Figure 2: Top 10 therapeutic classes in Japan by 2010 sales 590 6.2% 279 3.6% BUSINESS INSIGHTS .8% Psycholeptics (N05) 430 4. 000 dwarfing numbers employed in R&D (26.000 with the number of medical representatives (MRs) at over 61. Many of these companies are small (only 126 of the 378 have more than 300 employees). 62 . with 67 member companies. A total of 378 companies have products listed in the NHI drug tariff.000). the umbrella industry body. The JPMA is itself a member of the Federation of Pharmaceutical Manufacturers‟ Associations of Japan.Figure 3: Top 10 best selling prescription brands in Japan by 2010 sales 160 142 134 140 126 110 90 88 87 77 80 76 76 Boehringer Ingelheim Micardis (telmisartan) 100 Eisai Pariet (rabeprazole) Sales $m 120 60 40 20 Source: Business Insights Takeda Takepron (lansoprazole) Daiichi Sankyo Olmetec (olmesartan) Pfizer Norvasc (amlodopine) Hisamitsu Mohrus (ketoprofen patch) Pfizer Lipitor (atorvastatin) Eisai Aricept (donepezil) Novartis Diovan (valsartan) Takeda Blopress (candesartan cilexitil) 0 BUSINESS INSIGHTS Research-based pharmaceutical industry The Japan Pharmaceutical Manufacturers Association (JPMA). represents the interests of the innovative sector. Industry employment totals about 160. almost as much as the top-10 Japanese-origin firms. production. formulation development. Many have built up their Japanese activities to encompass regulatory affairs. especially from the US government. Ten of the top-20 biggest-selling companies are now of foreign origin (Figure 4). In a historical context this is a remarkable shift as it was not until Merck & Co purchased Banyu in 1983 that any overseas multinational ranked in the top 10. and several are entirely Japanese-staffed. sales promotion and distribution. has brought about a number of improvements to the regulatory and pricing systems that have benefited domestic and multinational research-based companies alike. PhRMA Japan speaks for US-origin companies and the Japan Executive Committee of EFPIA for European-origin companies.7% market share in 2010.“Foreign pressure” (gaiatsu). It is generally agreed there is no longer any bias against companies from overseas. 63 . and they held a combined 32. 9) (2.7) 627 (7.6) (1.4) (4.6) 360 (4.7) 208 (2.8) (2.0) 144 138 137 (1.2) (4.8) (3. 64 .3) 185 180 (2. the Japan Generic Medicines Association (JGA) which collectively account for more than 80% of generic sales.6) (2.6)(1.1) 340 318 (3.1) 600 496 (5.Figure 4: Top 20 pharmaceutical companies in Japan by 2010 sales to wholesalers 684 700 (7.6) 400 255 247 240 227 216 (2.5) 300 200 Lilly Abbott Ono Bayer Shionogi Dainippon Sumitomo Kyowa Hakko Kirin Sanofi-Aventis AstraZeneca Otsuka GSK Pfizer Novartis Eisai Chugai (Roche) Mitsubishi Tanabe Daiichi Sankyo Astellas Takeda 0 MSD (Merck & Co)* 100 * Includes consolidated businesses of Banyu and Schering Plough prior to October 2010 merger Source: IMS Japan website BUSINESS INSIGHTS Generic industry There are 44 member companies (Figure 5) of the generic industry grouping.1) (2.4) (2.6) Sales $m 500 405 390 375 (4. the International Generic Pharmaceutical Alliance. Japan. In December 2012.Founded in 1968. Figure 5: JGA member companies Choseido Pharmaceutical Nitto Medic Corporation Daiko Pharmaceutical Ohara Pharmaceutical Daito Pharmaceutical Okhura Pharmaceutical Doijin Iyaku-kako Pola-Pharma Fuji Pharmaceutical Sandoz KK Hikari Pharmaceutical Sanwa Kagaku Kenkyusho Hospira Sawai Pharmaceutical I‟rom Pharmaceutical Showa Yakuhin Kako Isei Taisho Pharmaceutical Industries Iwaki Seiyaku Taiyo Yakuhin Kobayashi Kako Takata Seiyaku Kotobuki Pharmaceutical Tatsumi Kagaku Kyorin Rimedio Teika Pharmaceutical Kyowa Pharmaceutical Industry Teva-Kowa Pharma Maeda Pharmaceutical Industry Towa Pharmaceutical Medisa Shinyaku Toyo Capsule Mylan Seiyaku Tsuruhara Pharmaceutical Nichi-Iko Pharmaceutical Yoshida Pharmaceutical Nihon Generic Yoshindo Nippon Chemiphar Zensei Pharmaceutical Industries Nipro Pharma Corporation Zydus Pharma Japan Nissin Pharmaceutical Source: JGA BUSINESS INSIGHTS 65 . the IGPA will hold its 15th annual conference in Kyoto. It is a member of the FPMAJ and the global generics group. the JGA was known as the Japan Generic Pharmaceutical Manufacturers Association (JGPMA) prior to April 2008. 320) and Europe (62. and TaiyoYakuhin (an unlisted company). Though funded by some generic companies. four main domestic producers dominated: Sawai. The market has changed completely over the past five years with the entry of some Japanese R&D majors and from overseas several of the leading multinational generic firms. according to the Federation of Japan Pharmaceutical Wholesalers Association. the Japan Society of Generic Medicines is an academic body independent of the industry.Until recently. with a combined 90% market share (Table 14). The evolution and the current situation are detailed in chapter seven. FJPWA membership was 206 in 2000 and over 400 in 1990. 66 . self-dispensing medical and dental clinics. In total. Wholesalers Almost all (98% by value with prescription drugs) of pharmaceutical distribution to hospitals. more than double the number in the US (71. Nichi-Iko. Towa. the number of customers to which wholesalers deliver products is 156.728 in Japan. The FJPWA currently has 98 member companies (headquarters) but the business is increasingly dominated by four groups (including around 20 affiliates).420). and pharmacies goes via wholesalers (oroshi). Though it promotes greater usage of generics its views are not always in line with those of the JGA. Consolidation through M&A has been ongoing for many years. Taiyo was also a contract manufacturer. Table 14: Forecast sales of leading wholesalers. All wholesalers are Japanese-owned. MSs will visit hospitals. wholesalers remain “colored” by them.9 AlfresaHD 2. Medipal and Alfresa are the prime suppliers of Takeda products. Toho) and dispensing pharmacies (Toho). author communication BUSINESS INSIGHTS On average. FY2011 Company Total sales (¥ bn) Total sales ($ bn) Sales of prescription drugs ($ bn) Sales of prescription drugs (¥ bn) Share of prescription drug market(%) MedipalHD 2.1% in the US. Most large manufacturers will use 30–50 different wholesalers. wholesaling accounts for 83% of turnover of these companies (wholesaling of prescription drugs alone for 79%). with which they share IT systems and market intelligence. while Toho is not supplied at all by the manufacturer). FJPWA estimates 5.g. Support to manufacturers‟ own medical representatives (MRs) is a major part of wholesaler operations. and this dictates their stockholding (e. clinics and pharmacies every day. A differentiating feature of the Japanese market is the presence of a large number (almost 20.2 TohoHD 1. Suzuken).663 33 1.183 27 2.3 million calls annually by MSs to 67 .000) of wholesaler representatives.167 27 24.752 22 1. This helps explain why sales and administration for the average Japanese wholesaler account for 7.888 24 22.1% of its costs compared to 2. Large wholesalers deal with 150–200 manufacturers.1 Suzuken 1. with the balance arising from manufacturing (Alfresa. healthcare-related services (Suzuken. known as marketing specialists or MSs. 10–15 will be considered core.7 Source: Supply Chain Logistics Community. there have been no entries to date by wholesalers from other countries.024 13 12. Though no longer tightly tied to particular manufacturers.060 13 1.667 21 20. number 55. is 6.3%. and usually with another pharmacist among the assistants. Sixty-five percent of pharmacists are female.900 community pharmacies (yakkyokku) at the end of 2010. As elsewhere in Asia. the link between prescribing and dispensing in Japan has traditionally been closer than in western countries. conduct any necessary recalls. while both clinics and health insurance pharmacies are the primary domain of the MS. Until relatively recently. A voluntary “carrot and stick” approach has been employed. number 26. issued by banks with a date of payment three to five months ahead. and collect payment. The gross profit of Japanese wholesalers. better known as drugstores (yakuten). exchange information with MRs and customers. in particular by progressively increasing the prescription-issuing fee (syohosen ryo) for doctors while lowering the dispensing fee if prescriptions 68 . promote products. wholesalers. Pharmacies Japan had about 81. take orders. MSs check inventory. Government policy over the past 50 years has been two split the two roles. Under the control of a pharmacist. In accordance with the Anti-monopoly Act. especially after taking into account differences in the number of customers to which products are delivered. This is comparable to figures in the US and Europe.700. the FJPWA estimates. through MSs.prescribers alone. the majority of dispensing has been done by pharmacists on the payroll of physician-run hospitals or clinics and not by independent pharmacies in the community. a practice known as bungyo (literally “separation of business”). Delivery frequency in urban areas is three to four times a day. pharmacies are allowed to sell any OTC medicine and those with a contract with NHI can also dispense health insurance prescriptions. The last named is sometimes made in the form of promissory notes (yakusoku tegata). Dispensing pharmacies. have the sole right to conduct selling price negotiations with all types of purchasers. Sales promotion in large hospitals is mainly conducted by MRs alone. as a share of NHI prices. Pharmacies without dispensaries.200. known as chozai yakkyoku. in small/medium-sized hospitals MRs and MSs will work together. 99 Quol 217 0.06 Kraft 283 1.77 Sogo Medical 254 0.45 0.51 0.56 0.49 0. Table 15: Top 10 chain pharmacies. and least developed in Kyoto.6% of total pharmacy sales.originated from a single medical facility.87 0.38 Nihon Chouzai 253 1. By prefecture. bungyo is most complete in Akita (bungyo rate 79.49 87 0.78 0. legal prescriptions increased from 450m to 680m and the proportion of all NHI prescriptions dispensed by community pharmacies (the bungyo ratio) reached 61.03 1.1%).96 Tanpopo Total Source: Takeda BUSINESS INSIGHTS 69 .44 2003 9. From 1999 to 2009. Kanagawa and Saga.3% in August 2010. Outlets of the 10 leading multiple groups (Table 15) represented fewer than 4% of all pharmacy premises in 2008 but dispensed 7% of the country‟s NHI prescriptions and accounted for 9.62 0.4 Pharma HD 163 0.78 1.1%).79 Hanshin 124 0.49 6. Wakayama and especially Fukui (bungyo rate 32.36 Yakuju 128 0.38 0.3 Trontia 136 0. The number of so-called legal prescriptions (ingai shohosen) – those valid for dispensing outside a medical facility – have steadily grown. the community pharmacist has replaced the clinic doctor as the main recipient of the yakka-sa. Chains are of growing importance. With the growth in bungyo. 2008 Company Number of premises % of total market sales % of total prescriptions Ain 358 2. Multinationals. earning yen-denominated sales. 70 .Toho HD. were delighted. the yen rose through the symbolic ¥100 level with much attendant publicity to reach a high of just under ¥80 in the early 1990s. Defying expectations. has also acquired about 30 small chains. to a record post-war high of ¥76 to the dollar in August 2011. but it has greatly strengthened against the US dollar ($). one of the leading wholesalers. these pharmacies account for 5% of Toho‟s turnover but for 21% of its operating profit. From a low against the US dollar of ¥360 in the 1970s. Trading as Pharma Cluster. following the Great East Japan earthquake the yen rose further. Foreign exchange rates The yen used to be one of the most volatile of major currencies. totaling about 300 pharmacies. but adapted – cutting costs and switching production overseas . and to a 10-year high against the euro the following month.and survived. euro and pound sterling (GBP) in recent years. Japan‟s export-orientated industries forecast doom and gloom. The balance is made up by GP clinics (25%). erratic supply. traditionally the main route to market for generics.  Due to price erosion and competition. or two/three NHI price revisions. DPC hospitals (12-15%). after which they receive 90% of the lowest tariff price of an existing generic . with purchases made as part of a basket deal.7bn).  Dispensing by community pharmacies probably accounts for 50% of total generic use. Patent-expiring blockbusters can attract attention from 30 or more generic companies. are being replaced by wholesalers. Subsequent generics receive the lowest tariff price for that ingredient up to 20 copies. 71 .  First generics are priced at 70% of the tariff price of the originator brand. with the numbers having increased since the process became a biannual event in 2007.1% by volume in FY2010 – among the lowest shares of any OECD country – with sales on an NHI price basis of about ¥834bn ($9. new generics often have a commercially viable lifespan of less than five years. for making available only a limited number of formulations.  Generic companies in Japan have a long-standing reputation for poor product quality. Manufacturers can only stay in business through aggressive marketing of new generics and by introducing a steady stream of replacement products. strengths and pack sizes. Despite their large numbers. they held market shares of only 9. Wholesalers aim to prioritize stockholding from five generic suppliers. and offering inadequate distribution and information services.  Local sales agents (hansha). bioinequivalence.4% by value and 23. questionable business practices. The average pharmacy uses generics from 5–10 companies.Chapter 4 Generics market Summary  Generics account for nearly half the drugs in the NHI list. and non-DPC hospitals (12-15%).  More than 200 new generic products and in excess of 600 presentations are tariff-listed each year. 893 21. and the expansion of the diagnosis procedure combination (DPC) fixed reimbursement system in hospitals. Everything from the NHI pricing system to the country‟s relentless drive for new technology and the strong sense of brand consciousness seems to count against them. off-patent 1. patented 1.700 presentations. MHLW has been slow to recognize the potential of generics to provide savings that allow headroom to pay for innovative medicines.6 49 Originator brand.6 Others (crude drugs. erratic 72 . especially on elderly patients. bio-inequivalence. JP products. yet the business supports over 80 domestic manufacturers and a growing number of foreign entrants that together supply 6.1 Generics 6. 2007 Category Presentations Market share by volume (%) Market share by value (%) Originator brand.7 6. kampo herbal products) 4.238 24.9 35.700 18.Introduction to generics Generic medicines (kohatsuhin) are very much an enigma in Japan.528 34. has been subject to frequent patent litigation.8 9.3 Source: MHLW data cited by JGA BUSINESS INSIGHTS Compared to government healthcare departments in other countries. Other generic drivers include the copayment burden. and has endured a recent extension in the regulatory re-examination period. blood products. questionable business practices. or nearly half the total number listed in the drug tariff (Table 16). Each measure is discussed later in this report. Generic companies have a longstanding reputation for poor product quality. but it has now enacted several pro-generic measures and set a target for generic use. Though the generics sector is threatened by the very much bigger marketing muscle of brand name companies. the major problem faced is one of image. Table 16: Breakdown of the NHI drug tariff by product type. Patentees alleging infringement are forced to delay injunction applications until after an NHI listing of new generics has taken place. With originator brands these forms are usually 10-page brochures. this means “coming endlessly”. R&D-based companies and health professionals alike. are invalid or would otherwise not be infringed (Notification No. strengths and pack sizes. in colloquial Japanese generics are described as zoro-zoro products. Though the industry often uses the term “GE product”. though familiarity rarely equates with behavioral change to choose generics. As a result. Because the quantity of information that can be included in a package insert is limited. an appropriate description in that many leading off-patent original brands spawn well over 30 copies. doctors rely on information sheets (known as “interview forms”) prepared by manufacturers to supplement this.supply. for making available only a limited number of formulations. MHLW now asks generic manufacturers to provide assurances of stable supply for at least five years from launch. generics have been looked down upon by MHLW. Following mass media advertising. Among the current list of top-selling generics would be amlodopine besylate and tamsulosin. the public has become familiar with the English term “generic”. The result has been embarrassment for MHLW and confusion for the customer as up to 15% of listed generics became unavailable each year because of actual or threatened litigation proceedings. Generics which fail to be launched within three months of tariff inclusion risk delisting. 73 . MHLW will also take such failure into account (as it does with companies whose marketing policy has been „problematic‟) when it considers listing the following year. 0315001 of MHLW‟s Health Policy Bureau dated 15 March 2005). and until recently patients were unaware of generic possibilities. and for offering inadequate distribution and information services. Literally. but the quality and quantity of information provision by generic manufacturers has been much less. and to provide a copy of an agreement with the innovator or legal opinion that the relevant patents have expired. Unstable supply is mainly a result of the NHI pricing system but also arises from the patent system. Due to the large numbers of synonyms for each originator brand. Such generics. MHLW sometimes requires companies to switch to use non-proprietary names to avoid confusion and medical error. known as “substitute products”. 2010 Combination product. 3835 JAN (nonproprietary name). 2946 Source: JGA BUSINESS INSIGHTS 74 . have to undergo the formality of resubmission for tariff listing under their Japan Accepted Name (JAN).Most but not all generics are themselves branded or with nomenclature that is manufacturer-specific (Figure 6). 530 Unified name (JAN + company). Figure 6: Breakdown of generic listing in the NHI tariff by product nomenclature. 404 Brand names. Sankyo) Myevastan (Towa) Liduc (Elmed Eisai) Pravestan (Nippon Chemiphar) Mevastan (Kyowa Hakko Kirin) Pravastan (Sawai) Pravalon (Teikoku Medix) Mevarich (Kaken) Mevan (Nichi-Iko) Zocor (simvastatin. Pfizer) Fluconazole (Kissei) Fluonazon (Nichi-Iko) Fluconarl (Sawai) Fluzole (Towa) Fulkazil (Choseido) Fluconamerck (Merck Hoei) Furuzonar (Hexal) Pepcid tablets (famotidine. Yamanouchi) Famogast (Nippon Chemiphar) Gasmet (Fuso) Famostagine (Towa) Blostar (Elmed Eisai) Tiostar (Merck Hoei) Famotidine (Sawai) Progogue (Nichi-Iko) Gamofa (Maruko) Pravachol tablets (pravastatin. Banyu) Sinstatin (Nippon Chemiphar) Simvastatin (Meiji Seika) Ramian (Teikoku Hormone) Lipoblock (Towa) Lipo-Off (Nichi-Iko) Lipodown (Sawai) Source: Crecon Research & Consulting BUSINESS INSIGHTS 75 . innovator) Generic versions (company) Diflucan lotion (fluconazole.Table 17: Specimen brand names of popular generics Original product (JAN. g a single tablet.2 499 17.8 331 12. their market shares over the same period were 9.8 561 17. capsule or injection vial).1 Note: *survey method changed Source: JGA BUSINESS INSIGHTS International comparison has the potential to mislead though as while IMS MIDAS market segmentation data are used in most other developed countries (i.1 2006 5. Nevertheless.7bn at average 2010 rate).4 2004 5. UK and Germany that year were 14%.4 834 23.2 376 16.1 305 17. Table 18: Generic penetration in Japan.2 2003 5.8 2005 5. generics in Japan had market shares of only 9.6 2009* 8. where both are measured in terms of NHI pricing units (e. JGA reports. For the main category of oral generic forms.2 2008 6. 30% and 24% by value.9 2007 6.1% by volume in the year to 31 March 2010 – one of the lowest shares of any OECD country – with sales on an NHI price basis of about ¥834bn ($9. Japan calculates generic volume share as the ratio of the quantity of generic products sold and the quantity of all prescription drugs sold.4% by volume. Japan still sits bottom of the markets surveyed in terms of generic penetration (Figure 7). and 72%. Comparable overall generic penetration figures for the US.6% by value and 23.4% by value and 23.e. and 63% by volume respectively. 76 . despite their large numbers. 2002–10 Fiscal year By value (%) By value (¥bn) By volume (%) 2002 4.2 375 16.3 2010 9.Market size As shown in Table 18. for example. the generic share of the patent-expired or unprotected market – originator brands and their generics).7 439 16.5 752 20. 67%. 28.1% of sales volume and 9. There were also geographical variations.7% in 2008 to 23.9% of products dispensed by hospital pharmacies to inpatients.Figure 7: Generic volume penetration by country. Dispensing by community pharmacies – both independents and chains – probably now accounts for almost 50% of total generic sales. 77 . from highs of 36% in Okinawa prefecture and 28% in Kagoshima prefecture. DPC hospitals (1215%) and non-DPC hospitals (12-15%). to a low of 18% in Akita prefecture.5% of sales value from April through June 2011. 2011 BUSINESS INSIGHTS A MHLW survey based on health insurance claims released in June 2011. revealed that the generic volume share rose from 20. generics accounted for 23. and 21. Generics represented 20. a higher increase than it had anticipated.6% of products dispensed against “legal prescriptions” by community pharmacies. According to a preliminary analysis by the JGA.5% in 2009. The balance is made up by self-dispensing GP clinics (25%).2% of products dispensed by hospital pharmacies to outpatients. 2009 80 70 60 50 % 40 30 20 10 0 Japan* Italy France Spain Mexico UK Brazil US Germany Canada * Japan data from MHLW Source: Danzon & Furukawa. with a number withdrawn due to lack of time to prepare for launch. Table 19: Numbers of new tariff-listed generics. with numbers having increased since the process became a biannual event in 2007 (in accordance with MHLW Health Policy Bureau Notification No. are now tariff-listed each year (Table 19). 2003–11 Year Number generic presentations added to tariff (number different APIs) Number of different APIs 2003 415 19 2004 380 18 2005 432 26 2006 402 21 2007 July 439 20 19 1 463 18 99 2 318 13 394 11 197 6 414 7 330 6 521 12 November 2008 July November 2009 May November 2010 May November 2011 June November Source: MHLW BUSINESS INSIGHTS 78 . or in cases when the product did not require listing in the Official Gazette due to its inclusion in the Japanese Pharmacopoeia.Generic inclusion in NHI drug tariff In excess of 600 new generic presentations. 0515003 of 15 May 2007). representing more than 200 individual generic brands. for legal or commercial reasons. The numbers of applications for listing are even higher. Patent-expiring blockbuster brands invariably attract widespread interest from large numbers of generic companies for example:  70 generic presentations of the antihypertensive amlodopine from 34 generic companies were added to the NHI tariff for the first time in July 2008. a form not available from Pfizer. Towa also listed orodispersible tablet forms of the molecule. Three of these companies also obtained listing for donepezil fine granules 0. only five generic firms (i. There is no lack of interest in genericizing atorvastatin from other generic companies.  A record 101 generic presentations of the Alzheimer‟s disease treatment donepezil from 30 companies were listed in November 2011.  28 companies entered the generic tablet market for another antidiabetic. the world‟s largest selling drug. The scheduled May 2011 listing was delayed one month due to the widespread disruption caused by the earthquake and tsunami that struck north-eastern Japan the previous March. The November 2011 listing was notable for adding 521 generic presentations to the tariff. glimepiride. from 30 generic companies.  50 versions of the antidiabetic pioglitizone from 18 generic companies were price listed in June 2011.e. the highest number included at the same time since 1998. when generic forms were listed for the first time in November 2011. No fewer than 101 new listings. Kobayashi Kako. Sawai and Towa) obtained listings for 5mg and 10mg tablets of atorvastatin. 79 .5%. Elmed Eisai. it is just that supplies of API are limited due to Pfizer still holding a Japanese patent for the crystalline form of the active ingredient and fears of litigation. though at 69 the number of substitute product listings (included in the total) was also unusually high. were for 3mg and 5mg generic tablet forms of Eisai‟s blockbuster brand Aricept (donepezil). when its first listing took place in November 2010. In contrast. marketed in Japan by Pfizer as Lipitor. Sandoz. Claritin tablets and dry syrup (MSD). 1999–2007 Year INN Original brand 1999 alacepril Cetapril (Dainippon) amezinium Risumic (Dainippon) enalapril Renivace (Banyu) cilostazol Pletaal (Otsuka) voglibose Basen (Takeda) lansoprazole Takepron (Takeda) tamsulosin Harnal (Astellas) epalrestat Kinedak (Ono) terbinafine Lamisil (Novartis) ozagrel Xanbon (Kissei)/Cataclot (Ono) risperidone Risperdal (Janssen) pranlukast Onon (Ono) cetrizine Zyrtec (UCB) acarbose Glucobay (Bayer-Schering) 2000 2005 2007 Source: MHLW BUSINESS INSIGHTS 80 .793. levofloxacin (ophthalmic use). loratidine. Aromasin tablets (Pfizer). As well as donepezil and atorvastatin. 115 injectable forms and 37 topical forms) from 72 companies. nateglinide. but after withdrawals the total number of different generic presentations entering the tariff was 521 (369 oral forms. Table 20: Examples of new generics first listed in NHI tariff. The additions brought the total number of presentations listed in the NHI tariff to 17. exemestane. Fastic/Starsis tablets (Ahjinomoto/Astellas) and Lillan tablets (Dainippon Sumitomo) respectively – will now become long listed brands at the time of April 2012 NHI price revision.The number of applications for listing in November 2011 was actually 563. The corresponding originator versions – Aricept tablets (Eisai). and perospirone were listed in November 2011. Cravit eye drops (Santen). Flolan injection (GSK). first generics of epoprostenol. Lipovas tablets (Astellas). Additions to the tariff invariably include several products with active ingredients new to the generic market (Table 20 and Table 21). Table 21: Examples of new generics first listed in NHI tariff. 2008–2011 Year INN Original brand 2008 amlodopine Norvasc (Pfizer)/Amlodin (Dainippon Sumitomo) ebastine Ebastel (Dainippon Sumitomo) meloxicam Mobic (Boehringer Ingelheim) pimobendon Acardi (Boehringer Ingelheim) cefdimir Cefzon (Astellas) temocapril Acecol (Daiichi Sankyo) levofloxacin Cravit (Daiichi Sankyo) bicalutamide Casodex (AstraZeneca) rebamipide Mucosta (Otsuka) fluvastatin Lochol (Novartis) gadodiamide Omniscan (GE Healthcare) latanoprost Xalatan (Pfizer) gemcitabine Gemzar (Lilly) doxorubicin Adriacin (Kyowa Hakko Kirin) rabeprazole Pariet (Eisai) glimepiride Amaryl (Sanofi-Aventis) fluvoxamine Luvox (Astellas) pioglitazone Actos (Takeda) edaravone Radicut (Mitsubishi Tanabe) risedronate Benet (Takeda)/Actonel (Eisai) meropenem Meropen (Dainippon Sumitomo) atorvastatin Lipitor (Pfizer) loratadine Claritin (MSD) donepezil Aricept (Eisai) perospirone Lullan (Dainippon Sumitomo) exemestane Aromasin (Pfizer) epoprostenol Flolan (GSK) 2009 2010 2011 Source: MHLW BUSINESS INSIGHTS 81 . B.7 (N. to 0.9. C… band‟) receive the lowest of existing generic prices until the total excluding the original brand exceeds 20. more convenient or better tolerated dosage forms) are supposed to receive a price commensurate with these features. MHLW announced.g.9 in 1994. This reflects an accelerated marketing approval process. the price is set at 70% of the originator‟s NHI price without any applicable premiums for new drug creation). 1992–2010 Price revision year % of originator drug price Before 1992 100 1994 90 1996–2002 80 2004 to date 70 Source: MHLW BUSINESS INSIGHTS Generics with “added value” features (e. Up to the 1992 revision. those listed in the Japanese Pharmacopoeia) should receive adequate prices to ensure their stable supply. generics will be tariff-listed in June and December each year.From 2012. and to 0. 82 .7 in 2004. MHLW‟s justification for the cuts has always been that market prices of new generics dropped rapidly after initial listing anyway. the price of the first generic was set at 100% of that of the originator brand (Table 22). The price calculation coefficient for “A band” generics was reduced to 0.8 in 1996. Table 22: Calculation of initial NHI prices for generics. Generic entries in the second and subsequent waves of tariff entries („B. when later generic entrants receive the lowest generic price multiplied 0. Introductory pricing of generics Pricing rules for generic entries to the tariff have been unchanged since 2004. Essential products (i. but such premiums are rare. The first copies (hatsu-zoro or “A band”) get the current NHI price of the original brand multiplied by a factor of 0.e. If the price is halved. double the percentage yakka-sa must be offered for the customer to realize the same discount in cash terms. Their introductory price is arrived at by multiplying the originator price by 0. it is not uncommon for NHI generic prices after the first revision to fall to less than half the price of the equivalent original brand. based on a regulatory pathway published in 2009 and defined as “a biotechnological product produced by a subsequent entry manufacturer and claimed to be comparable to a biopharmaceutical product already approved in Japan”. In any event. and tariff rates for generics risk almost a free fall. for competitive reasons. for generic makers to discount heavily when first entering the market.7 with the addition of a premium (dependent on the perceived quality of clinical studies on patients) of up to 10%. Price revision of generics Since there is a strong tendency. This would result in biosimilars being priced at up to 77% the price of the originator. 83 . all generics have to be offered at very heavy discounts to attract business away from the innovator with its much stronger marketing power and better reputation. Large discounts are penalized by large price cuts at the following NHI revision (Table 23). are viewed by MHLW as a subcategory of generics.Biosimilars. A mission of MHLW is to ensure continuous availability of essential but low volume generic lines.7%. it is not unusual to find these products have received the largest price increases (e. especially those with monographs in the Japanese Pharmacopoeia. generic companies are forced to adopt “hit and run” tactics. both at the 2010 revision) while other generics receive the largest price cuts as a result of massive discounting in very competitive classes.8 24. 84 . the uniform pricing rule. New generics have a commercially viable lifespan of less than five years.Table 23: Results of biennial NHI price revisions: Overall average price cuts versus those for generics Revision year Average price reduction (%) of total market Average price reduction of generics only 2002 4. Products with prices less than 20% of that of the originator are grouped together and listed by INN with a common NHI price.8 2010 5. the weighted average market price of the group. As a result. MHLW has a second mechanism to support very low-priced generics. Not only do they become uneconomic to manufacture but the yakka-sa becomes non-existent.2 Source: Sawai (author communication) BUSINESS INSIGHTS Because of the pricing system. water for injection 500ml +10.8%.3 2008 4. phenytoin 100mg tablets +3.9 11.6 29 2004 3. New opportunities are exploited through aggressive marketing and then discontinued when the inevitable NHI price cuts catch up. or two-three NHI revisions.g.5 2006 6 14. Manufacturers can only stay in business by introducing a steady stream of new products.8 12. but with a change in the market several of the larger generic suppliers have been urging them to take their products into stock. whose lion logo on its many small vans is a familiar sight to the Japanese public. The inventory level for generics at wholesalers is short. Wholesalers originally did not handle generics. the level of collaboration with manufacturers‟ MRs. generics still make up a small component of turnover for the average wholesaler. at 50% and 20% respectively. They also demanded very high discounts which was another factor behind generic companies switching to general wholesalers. and the amount of rebate and promotional incentives offered. Yamato Transport. commenced direct to pharmacy deliveries with Taiyo 85 . 19% in hospitals and only 3% in dispensing pharmacies. the country‟s leading door-to-door courier. have good personal relations with local GP clinics and smaller hospitals. Self-dispensing clinics. 23% to hospitals and 20% to dispensing pharmacies. While direct delivery still accounts for 85% of Towa sales (GP clinics and smaller hospitals make up 40% of its business). are much less. under one month. are now in decline and marketing efforts for generics have been increasingly switched to both hospitals (because of DPC payment) and community pharmacies (because of the growth in bungyo). Selection is based on continuity of supply. Hansha.Distribution of generics Generics traditionally found their greatest usage in the clinic market. Those generics that are distributed direct go mainly via small regional selling agents (known as hansha) on a sole agency basis. which total about 75. By 2010. direct shares for Sawai and especially Nichi-Iko. General wholesalers stock generics from a range of suppliers. Sawai‟s sales in 2003 by customer group were: 57% to clinics. large hospitals and dispensing pharmacies almost entirely rely on them for supply. Today each of the four nationwide wholesalers and all the main 94 regional wholesalers deal with generics. but aim to prioritize around five different generic manufacturers. especially in urban areas. With better service levels from wholesalers. the pharmacy share had risen to 52% and the clinic share had fallen to 21%. especially those run by single-handed GPs. In 2008. Though accounting for 40% of their stockholding by numbers. just over 6%. Morgan Stanley Research estimates for 2000 suggested 78% of generics were dispensed by GPs. But patients are impatient and pharmacies prefer to dispense from the stock on their shelves. As each pharmacy deals with up to five wholesalers. there is little delay before particular generic needs can be met. Selection is mainly made on the basis of the manufacturer‟s reputation and reliability. with twice daily weekday deliveries from each in cities (three deliveries on Fridays). This initiative did not last long following a negative campaign run by wholesalers and their MSs. 86 .generics. and problems with collecting debt. not price. especially as most pack sizes are large. The average pharmacy would use generics from 5–10 different generic companies with purchases made as part of a basket deal. Self-dispensing clinic doctors are active users of generics.  The 2008 change from doctors being required to authorize substitution to them being required to specifically block it greatly increased generic substitution opportunities.Chapter 5 Attitudes toward generics Summary  Some health insurance societies now provide their members with written information on how much they could save by switching to generics. though one-third of prescription forms had the “do not switch” column signed. apart from lessening the patient‟s co-payment burden. but the results have been impressive. with their higher prices than generics. Originator brands. who are often suspicious of them. offer greater margins. Multiple pharmacies are more enthusiastic users of generics. and the burden of explanation to patients. though their numbers are declining.  Other issues facing pharmacists with generics are reduction in revenue. the large stock inventory needed. sometimes routinely.  A high proportion of decisions not to use generics comes from the patient.  DPC funding for hospitals has stimulated low-cost drug purchasing and given a boost in particular to the use of injectable antibiotics and anticancer drugs in generic form.  Though pharmacies earn additional fees for high generic usage.  Physicians employed by hospitals are salaried and have no economic incentive from prescribing one drug rather than another. Only a small proportion of the population has received such mailings. Non-DPC hospitals have little incentive to use generics. 87 . especially after patients may be reluctant to follow their recommendation and defer instead to the doctor‟s choice. The typical saving in co-payment from accepting a generic in place of the prescribed brand is insufficient to override this.  No incentives are currently given to doctors through NHI to prescribe generics. many independents believe it is not worth the effort. and medium-sized firms) and other occupation-based insurance societies – traditionally had no role in the choice of prescribed item.6% of prescriptions from self-dispensing doctors included at least one generic. 2006) 88 . As of mid-2009.500 health insurance societies were distributing such information and Kemporen reported in August 2011 that almost 60% of its member societies were already informing or planning to inform their insured persons of the savings they could make by switching to generics. Since 2006. There is also a moral hazard on the part of the insurer – it knows the government will come to its rescue in the case of serious financial difficulties. or its employee.Insurers The different insurers that operate under NHI – municipal governments. the impact of prescribing controls even at affiliated facilities was limited. except in the rare case a patient visited a provider under the insurer‟s direct control. MHLW. In July 2006. the National Federation of Health Insurance Societies (covering employees of small. whereas only 41. Insurers merely paid whatever bill was presented to them. Physicians Physicians views of generics are in part likely to depend on (a) whether they are the owner of a hospital or clinic. health insurance societies for employees of large corporations. As insurers couldn‟t limit a patient‟s choice of provider. 48% of patients in receipt of such information have reported to have changed to using generics because of it. or engages only in the former practice. however.4% of prescriptions from non-dispensing physicians did so (Survey of National Medical Care Insurance Services. and (b) whether their clinic or hospital both prescribes and dispenses medicines. some insurers have been regularly providing their members with written information on how much they could save by switching to generics. more than triple the proportion recorded two years previously. However.4% of the population have so far received these mailings. 40 out of the total of about 1. 48. only 10. The results have been impressive. The hospital environment is also proving more professionally and financially attractive to work in for young doctors than clinics. Small clinics without beds are likely to be operated by single-handed doctors. whose numbers are declining. MRs work hard to form close bonds with influential doctors. Set against this are the “human wave” tactics by MRs from research-based companies. The practice of in-house dispensing has been gradually decreasing nationwide due to MHLW‟s bungyo policies. A JGA survey of almost 1m prescriptions received by 1. However. An equivalent yakka-sa in yen terms is much more difficult to realise from generics than from original brands.000 community pharmacies in October 2006 – six months after “tick-in” substitution was first allowed . hospitals have by tradition been hostile towards generics. Clinics that self-dispensed filled up to 50. the difference between the purchase price of a medicine and its reimbursement rate.1% of the products they prescribe) while generic use declined as hospital size (measured by numbers of beds) increased. With the economic recession. Therefore. advising them against prescribing generics or encouraging completion of the “do not substitute” column. Even if the hospital‟s own pharmacy does its own dispensing for outpatients. 2009) found small clinics to be most active in generic use (36.Physicians employed by hospitals are salaried and have no economic incentive from prescribing one drug rather than another. physicians are also more conscious of patients‟ out-of-pocket costs. because of the lower prices of the former. which include making prescribing more financially rewarding than dispensing for clinics and hospitals.1% of prescriptions with generics. The largest hospitals (>500 beds) were least active in using generics (1. physicians increasingly prefer to select products on their therapeutic merit and not on their potential for an attractive yakka-sa for their employer‟s business. while clinics that only issued “legal prescriptions” for dispensing by an outside pharmacy prescribed generics only 18. hospitals themselves have always claimed the income they receive from purely medical services under NHI is inadequate and they only kept solvent by the yakka-sa. A 2008 survey (Iizuka T. which results in very heavy promotion of originator brands. many of whom still also dispense.showed that only in 17% of cases had the prescriber written his/her name and applied their personal seal to the part of the form authorizing substitution by the 89 .7% of prescriptions).5% of the time. But it is also due to lack of knowledge. while a further 18% had stayed with original brands as a general rule. As recently as 2008. however. The reasons given why some doctors are reluctant to either prescribe generics or have these dispensed instead of the prescribed brand invariably include a concern over the quality of generics. however. 11% of medical facilities had routinely prescribed generic products. and of those just 8.2% that did allow substitution. This meant that 26.000) were substituted. Though a JMA survey showed that 30% of doctors were against the idea. a survey of physicians revealed that 38% had almost no knowledge regarding the data required for regulatory approval of generics and an additional 40% admitted to knowing only a little. and are also inevitably fuelled by scare campaigns conducted by or on behalf of innovator companies. Overall. contained a column the prescriber had to sign to block substitution.4% of the total number) were actually substituted by the pharmacy. Interestingly.7% were in fact substituted in the pharmacy with a generic. While the study also found that 66% of clinic doctors and 60% of those in charge of outpatient departments in hospitals claimed to have personally endorsed prescription forms to allow generic substitution. 42. According to a survey by MHLW of health insurance claims conducted in the second half of 2007. but substitution was not authorized in most of these cases.4% of all prescriptions issued.1% of all prescriptions were substituted. the share of prescriptions where generic substitution for one or more prescribed item was permitted rose dramatically to 65.2% (or 1. 69% had done so some of the time. the end result was little different from the JGA survey above. therefore. according to a Chuikyo survey of pharmacies.pharmacist. Such concerns might arise from reports of generic batch recalls or bio-inequivalence. Of these 165. 90 . One third of prescriptions in July-August 2010 still had the “do not switch” column signed.8% of prescriptions were marked “do not substitute”. “Substitution allowed” prescriptions merely accounted for 17. generics were prescribed by their own brand name in 22% of prescriptions. Of the 61.452 out of 960.5% in 2009. This seemed to have represented a peak. A redesigned form. introduced from April 2008. Also after the April 2008 changeover to “tick out” substitution a survey by pharmacy chain Nihon Chouzai revealed that 38.402 “substitution allowed” prescriptions a mere 9.452 (6%) were in fact switched to generics. less than 1% of prescriptions (9. Another commonly cited reason for doctors avoiding generics is their instability in supply. Hospitals The adoption of diagnosis procedure combination (DPC) funding has brought about a change in position by those acute care hospitals which have signed up to use it.000+ physician and medical student panel members. Many generic products have a short commercial life. From 2. The lower prices of generics outweigh their lower yakka-sa in this situation. including generics. Under fee-for-service. DPC is increasingly applied.000 DPC hospitals by 2012 but as of April 1st 2011 there were already 1. Even new generics that are promised sometimes fail to materialize due to a legal challenge by the patent holder. Favoring generic usage is not entirely clear-cut. and any cost savings add to the hospital income. however. DPC has the potential to change the hospital pharmacy from a profit centre to a cost centre. which command higher prices than generics. as hospitals that make savings with use 91 . NHI reimbursement under DPC is based on a prospective amount regardless of what products and services are actually provided to the patient.449.568 respondents:  85% reported some anxiety about prescribing generics  66% expressed concern about generic quality  50% doubted the efficacy of generics  30% worried about side effects with generics  46% had concerns on whether generic companies could provide adequate drug information  25% were unsure whether stable supply of generics was possible. MHLW‟s original target was for 1. posted findings of a survey it conducted May 2011 on attitudes to generics. everything is reimbursed at tariff rates and brands. and to stimulate the use of low cost alternatives. offer the highest procurement gain as the yakka-sa. an online physician community platform that runs online surveys amongst its 36. MedPeer. being discontinued by their manufacturers either because of low sales or an uneconomic NHI price. The safety of generic contrast media has been an issue. under pre-DPC conditions. cisplatin and carboplatin). Strongest changeover to generics under DPC funding conditions has been seen with intravenous antibiotics for prophylactic use in surgery and with certain injectable anticancer drugs (e. it was claimed. some may have calculated it isn‟t worth the time and effort.g. and 42% reported no change.3m) by replacing original brands with generics in FY2010. 42% of DPC hospitals said that injection frequency had reduced. Patients can visit any doctor or health insurance pharmacy of their choosing. At a time when there were fewer than 800 DPC hospitals. became in 2004 the first teaching hospital in Japan to switch to using INNs rather than brand names on prescriptions. when these same hospitals had been in the pre-DPC phase and still under fee-forservice the generic share was 4%. still the majority. The hospital and its five affiliated facilities saved a total of about ¥624m ($7. One DPC pioneer. to use generics Pharmacists Though pharmacists earn additional NHI points for high generic usage. In FY2005. If they dispense what the doctor ordered they will have no problem with the doctor or patient. DPC tariffs are revised every two years based on actual historical expenditure. There is little incentive for non-DPC hospitals. 95% said their previous usage of injectable products was unaltered by gaining pre-DPC status. 15% said original brand generics had been replaced with generics. St Marianna University Hospital in Kawasaki. a survey by the Japan Society of Generic Medicines conducted in 216 of these found that generics accounted for an average 7% of the hospital drug bill in FY2006. apart from lowering patient co-pays. With regards to their policy for injectable products. so both parties are keen not to be seen as providing “second class” medicines in an attempt to ensure patient loyalty. The previous year.of low-cost drugs risk having payments in subsequent years cut. but the steady spread of DPC has resulted in a gradual but so far small conversion to generic use also there. 92 . Generic injectables are easier to adopt for hospitals than generic oral forms as the patient has little knowledge or say over their use. 941 in 2008 to 23. while the share of pharmacies whose generic dispensing rates were either between 20–40% or 40–50% increased (the proportion whose rates were already above 50% changed relatively little). This suggested to the authors that for pharmacies close to the target of 30%.8% of community pharmacies received the 6-point premium.1%. the introduction of the generic dispensation preparedness increment in 2008 and especially its increase on a graduated scale in 2010 was seen as a greater financial stimulus to pharmacists to use generics. introduction of the target encouraged them to meet it and obtain higher dispensing fees. as additional generic substitution was not rewarded after passing the 30% threshold already high-performing pharmacies (83. of which the most patients pay 30% as coinsurance.If a pharmacist substitutes the prescribed brand with a generic. However. Between August and September 2011. Trade estimates show it takes on average six minutes per patient to provide information and counseling on switching to a generic for the first time – after which the patient may still choose to take the prescribed brand.4% as of June 2009) were below the lower 20% threshold. they have to advise on why they have chosen that particular manufacturer‟s generic for that patient.4% of the total as of December 2008) were unaffected by the new target. Iizuka and Kubo (2011) analyzed the impact of these “hurdle policies”: The proportion of pharmacies whose generic dispensing rates were below 30% decreased after 2008. The number of pharmacies overall that claimed the “generic preparedness” fee actually fell from 34.864 in 2010. The volume-based compensation scheme introduced in April 2010 produced a larger shift in behavior as the majority of pharmacies (69. MHLW estimated that 16. While the basic ¥20 generic dispensing fee hasn‟t changed over time. not only do they have to explain to patients the benefits of switching (and counter any concerns about higher risks). 16. in spite of a change to a more generous fee structure (though the years are not comparable as MHLW switched to a volume-based system in FY2010). as the additional fees the pharmacist receives go towards the total pharmaceutical care bill. Furthermore. pharmacists fear that next time the patient would chose to go instead to a neighbouring pharmacy that doesn‟t advocate substitution.2% the 1393 . The share of pharmacies having a volume-based generic dispensing rate of 30% or higher was only 10. Nihon Chouzai. and 9. and 24. local pharmacists‟ associations (yakuzaishi-kai) have begun to co-ordinate their inventory management in order to increase their collective ability to satisfy generic substitution opportunities.point premium. In addition to dispensing fees. This is in marked contrast to the situation in the US. especially when they dispense for patients who have attended several different hospitals and clinics.0% the 17-point premium. Such concerns may be greatest in the treatment of chronic diseases. 42. where ironically the cost savings from generics to patients can be the largest. Reflecting its especially strong pro-generic policy. 71. giving pharmacists the freedom to dispense any version in stock. no fewer than 92. Many prescriptions specify a particular originator or generic brand – each prescriber will have their own favorite – and do not authorize its substitution. 94 .7% the 6-point fee for dispensing 20%+. Pharmacists recognize the short commercial life span of many generics and knowing a version is going to be discontinued in the very near future is a strong disincentive for using it. indicating that their historical generic dispensing rate in volume terms was below 20%. The resultant NHI price freefall inevitably leads to the demise of that generic. where pharmacy profits on generics are consistently higher than for brands. Few prescriptions are written by INN. In some regions. 11. Pharmacies also fear that growth in generics means them having to stock a very wide range of synonym products (700 or more). Multiple pharmacies are thought to be more enthusiastic about using generics than independents. pharmacy income arises from the yakka-sa. it being unprofitable to manufacture and market.7% of outlets of one of the leading pharmacy chains.4% did not receive any premium. received a generic preparedness the fee in September 2011. Consequently.7% the 13-point fee for dispensing 25%+ generics. When a generic is newly added to the NHI tariff its price is set at 70% of that of the originator.3% got the maximum 17-point fee for dispensing 30%+ generics. The need for suppliers to offer high discounts with generics results in above-average biennial NHI price cuts. generics offer attractive margins to pharmacies only for a short period of time after their launch. Wholesalers Wholesalers have no incentive to promote generics as they lower revenue and profit margins. a further 31% expected little change. two-thirds of pharmacists reported that patients carrying “I want generic” cards had helped the substitution process. When asked what percentage increase in the GE dispensing fee at the April 2012 revision would encourage greater generic use. and 30% said generics would grow regardless of new incentives. An even lower level of substitution was revealed in a MHLW survey conducted over one week in August 2011. One-third expected generic usage to increase if incentives to pharmacies via the fee structure were improved. 11% wanted fees to rise by 10%.According to a September 2011 report to Chuikyo on the impact of the medical fee revision in FY2010.619 of those 7. Yet in just 8. even though 67% of prescriptions showed the prescriber had not blocked generic substitution. followed by smaller pack sizes for generics and fewer generic versions. Pharmacists were also asked what changes might stimulate substitution in cases that allowed this.3% of prescriptions that permitted substitution did substitution with generics take place with at least one item on the prescription form (8. Generic dispensing is still not being promoted by pharmacies. switch by the pharmacist with at least one product on the form only occurred in 44. while a surprising 45% did not see the need for any increase. Pharmacists future views on generics were also sought in an August 2011 survey conducted by the Japan Pharmaceutical Association (2.6% in August 2010).7% of cases.000 pharmacists invited responded). 40% said 5%.2% of responses) that led to patients refusing substitution after it had been explained by the pharmacist was that they did not want something not prescribed by their doctor. The most common reason (30. it was concluded. The 95 . Sixty nine percent of prescriptions filled by pharmacies allowed substitution (up slightly from the 67% recorded in the same survey the previous year). They must satisfy the demand of their customers. however. The most popular answer (46% of responses) was INN prescribing. However. so all the larger wholesalers distribute generics. Japan has had more than its share of well-publicized “drug disasters” over the 96 . despite the explosion in social media. there are widespread concerns about safety and many believe that adverse drug reactions should be at a zero level. clear corporate image by a company is also vital for uptake of its products. the invariable inclusion of a warranty with goods of any price. perfect packaging and scrupulous after-sales service are expressions of the responsibility companies take for their products. Instead they prioritize their inventory around five different generic manufacturers. Even the firm specializing in “no brand name” consumer goods has a well known brand. Attention to detail.  The co-payment burden with healthcare.  Projecting a good.  Japanese have a passion for information. Patients Japanese consumers have a number of characteristics that differ from consumers in the west:  They are very image conscious. but all major daily newspapers are nationals and. and frequently digest detailed tabulated and graphical data offered by the lay media on highly technical subjects. The most powerful medium is television. courteous and attentive employees are essential for winning consumer trust and business. but these same attitudes prevail with patients as with the general population In addition. People are eager to know something about everything.000. both qualitative and quantitative.potential number of different stock keeping units with generics is 40. A “company without a face” was second only to “poor product/service” for holding a company in low regard by the public. Being well known and highly evaluated leads to a gain of the consumer‟s trust and confidence. They feel uneasy when they consider buying a product with which they are not familiar and aspire instead towards well-known brands.  Quality consciousness is so ingrained that it is almost taken for granted. Muji. might be high in comparison with other countries with social health insurance systems. especially the elderly on fixed incomes and the highest users of medicines. so it is impossible for wholesalers to handle the full range. tending to favor the perception of quality over price. Similarly. have the highest circulations in the world. respectively. Manufacturers have to implant in the minds of consumers the elements of trustworthiness and impeccable quality for new products before these too can enjoy high brand loyalty. but their respect for doctors and centuries old tradition overrides this “pharmacophobia” somewhat where ethical products and herbal medicines (kampo yaku). an image reinforced by frequent heavy discounting. SMON with clioquinol. Pharmacists are seen as traders. 97 . e. like patches. HIV-infected blood transfusions.2% of cases where generic substitution was authorized by the prescriber. Concerns have been aired in the lay media that differences between excipients in brands and generics may affect health outcomes (Nihon Keizei Shinbun. There is only one reason from the patient‟s perspective why a generic would be chosen over a prescribed brand – if the cost saving from switching made it worthwhile. the public has developed a fear of drugs of any type. so if there is a chance that an unfamiliar brand has been produced under less than perfect conditions sales will meet strong consumer resistance. As a result.27) per prescription item. Topical products. 2007) revealed:  In 92. especially systemic ones. consumers tend to stay loyal to those brands they have tried before and are more familiar with. A 2007 survey for the Chuikyo involving 588 pharmacies. the patient chose to receive the original brand. 2008). 688 clinics and 408 hospitals (MHLW.g. Health scares over imported food – especially from China .years. a high proportion of decisions not to use generics comes from the patient. motivated by profit. “aspirin shock” with a cold drink. are concerned.have reinforced loyalty to Japanese-made brands. In the OTC sector. are a particular problem as patients can easily spot the difference between adhesives. The trigger for accepting a substitute by the average patient is thought to be a saving in excess of ¥500 ($6. 16 deaths within week of launch of sorivudine. While more doctors are willing to prescribe or authorize use of generics.  Despite increased awareness of generics.5% of hospital physicians and 66. Doctors are referred to as sensei (teacher) by Japanese patients.  30% of patients expressed concern over the quality of generics. About 60% of physicians said this happened in fewer than 10% of cases. while only a minority of physicians (20%) believed substitution was initiated by the patient on more than 90% of occasions.7% of patients said the reduction in out-of-pocket expenses from use of a generic was not sufficiently high to justify a switch away from the brand (the drug co-insurance from use of a generic instead of a brand was reduced by 27. in his 70s.4% of clinic doctors said they had done this at least once. TV celebrity Tetsuko Kurroyanagi. only 14% of patients have asked doctors to prescribe them. 98 . as if doing so might be interpreted by physicians as a challenge to their godlike authority. Patients are often shy about asking for generics even if they know about them. They were then asked what proportion of “substitution allowed” prescriptions had been instigated by the patient. appeared in TV commercials and print advertisements for Towa urging consumers to “show courage” and ask their doctors to prescribe generics. 60. Respondent physicians were asked how many prescriptions they authorized for substitution. 31.6% on average). Nippon Kayaku. only later to disinvest. Mitsubishi Tanabe. independently or as joint ventures and alliances. several R&D majors set up or acquired divisions dedicated to generics or to generics and long-listed brands. The most important recent move has been Teva‟s acquisition of Taiyo. More recently. entered the business in the 1990s. and Towa – dominated generic sales for many years. Taiyo (an unlisted company). newcomers both from Japan and from overseas.  Most of the leading multinational generic companies – including Actavis. Hospira. Meiji Seika. Dr Reddy‟s and Zydus Cadila. Nippon Chemiphar. Eisai.  Lured by expectations of market expansion. Lupin has purchased two local companies. Sanofi and Teva – now have Japanese operations. Mylan. Investment has not only been one-way. 99 . Kyowa Pharmaceutical and I‟Rom. and Pfizer. Such companies included DaiichiSankyo. Daiichi-Sankyo acquired Ranbaxy in 2008. Most other companies were very small. Sandoz.  There is also a strong presence in Japan of Indian generic companies including Aurobindo. Lupin.Chapter 6 Generics industry Summary  Four domestic companies – Nichi-Iko. Sawai. Both rates were down on the corresponding period in the previous year. family-owned ones (Table 24). these were primarily manufacturers who owned generic product registrations.4% increase in their combined sales for the first half of FY 2011. and Nippon Galen and Oriental (both in 2005).5-50m 3 < ¥0. Towa bought J-Dolph to enter the hospital market (in 2003). Taiyo – now owned by Teva – was an unlisted company. suggesting that generic 100 . Taiyo. Towa. and Nichi-Iko – dominated the generic market.5bn 30 Source: JGA BUSINESS INSIGHTS The leading firms grew further through M&A. Sawai and Towa have financial year-ends in March. Often localized in the prefectures of Toyama and Yamagata. and were dependent on the larger firms for their marketing.Traditional domestic generic companies For many years. Table 24: Japan Generics Association companies by size. 2007 Annual sales Number >¥30bn 4 ¥10-30bn 7 ¥6-10bn 12 ¥2-6bn 14 <¥2bn 5 Capital > ¥2bn 5 ¥0. Many of the remaining firms were small. while Nichi-Iko‟s year ends in November. JAFCO (domestic venture capital) bought Showa Yakuhin (in 2004). Combined operating profits increased 4. and Sawai acquired some capital in Zensei (in 2004). The three leading listed domestic companies reported a 10.3%. Nichi-Iko acquired Maruko (in 2004). four domestic companies – Sawai. Kyorin bought Toyo. An offer to merge with Sawai was turned down by Kyorin in 2010. forecast for FY2011 Company 2011 sales (¥bn) Yea-on-year growth ( %) Net profits (¥m) Year-on-year profit growth (%) Nichi-Iko 78 21. Much of the growth with Nichi-Iko was with long-listed brands not generics.2 4. forecast for FY2011 Company No.300 15. hoping their reputation for quality and access to distribution channels would give them a competitive advantage. To generate revenue growth they turned to generics. MRs R&D spend (¥m) R&D as % of sales Total no.000 3. 101 . products (APIs) No.3 554 (259) 39 (23) Towa NA 506 1741 7.8 17.6 537 (287) 46(25) MR = medical representative Source: Author‟s analysis BUSINESS INSIGHTS Another part of the market was made up of companies which at one time had their own original brands.8 750 (NA) 46 (31) Sawai 912 392 2015 6.8 total 195 11. Table 25: Consolidated results of leading listed domestic generic manufacturers. new products (APIs) listed Nichi-Iko 625 266 1033 2.1 8.6bn) would put it in third place ahead of Towa.5 Sawai 69 8.5bn ($0.5 Towa 48 4 5. employees No.growth has begun to flatten out. Taiyo‟s FY2010 consolidated sales of ¥51.400 3 Source: Pharma Japan BUSINESSINSIGHTS Table 26: Other data on leading listed domestic generic manufacturers.100 -12. these long since had become off-patent long-listed brands. More recently there has been a resurgence of interest in the sector. Tanabeseiyaku Hanbai.  Daiichi Sankyo set up a new. multinational generic firms who entered Japan for the first time. Generic sales in FY2010 were ¥14bn ($160m). in 2008. Kaken and Mochida were among medium-sized research-oriented firms to create generic offshoots. backed by promotion through 500 medical representatives.  Poultice-specialist company Teikoku Seiyaku created a Teikoku Medix subsidiary. more easily titrated or better tolerated formulations with superior packaging than the molecule‟s original brand) targeting the ageing population. bioavailable.e. or to generics and long-listed brands. and Zensei. with the setting up or acquisition of entire divisions dedicated either to generics.More important new entrants were some of the Japanese R&D majors. convenient. Nippon Chemiphar. to focus on long-listed brands and generics. Domestic R&D company presence Several Japanese brand name firms entered the mainstream generics business in the late 1990s.g. Hishiyama.  Nipro.  Eisai set up an Elmed (short for „elderly medicine‟) subsidiary in 1996 to focus on added-value or “super” generics (i. As part of its mid-term plan. 102 . Such hybrid companies include:  Meiji Seika. Taisho in 2001. acquired Takeshima. off-patent ingredients in more elegant. Daiichi Sankyo Espha. the company is expecting ¥50bn ($630m) sales of generics among a ¥200bn turnover from Espha. Welfide in 2000. Kyowa Hakko in 2001).  Mitsubishi Tanabe formed its own 85%-owned generic/long listed brand division. and several Indian companies with a primary presence originally to sell active pharmaceutical ingredients (APIs). wholly-owned mature products division. Yamanouchi in 2003.  Oncology specialist Nippon Kayaku introduced a range of generic anticancers. only later to scale down or completely disinvest (e. a manufacturer of medical supplies and devices. 68 lines Fuso Pharmaceutical 5.4 52.6 - 25 APIs.9 29 37 APIs 18 23. one of the leading wholesalers. 50 lines Nippon Chemiphar Tanabeseiyaku Hanbai Elmed Eisai Mochida Wakamoto Source: Nikkan Yakugyo.8 135 APIs. Kyorin set up Kyorin Rimedio.7 11 APIs. 27 lines 2.7 200 lines Kaken Pharmaceutical 7.1 34.105 lines Daiichi Sankyo Espha 4.9 2.6 58.8 166 lines Nippon Kayaku 15. 11 lines Aska Pharmaceutical 14.1 44 lines 14 64. 45 lines 3 - 16 APIs. June 7th.8 42 APIs. Table 27: Generic sales of innovative Japanese manufacturers. has publicly declared its continued disinterest in entering the generics market in Japan.7 11.9 16. a leading dispensing pharmacy chain operator with over 300 existing outlets.1 58 APIs.7 30 APIs. 2011 (cited by JGA) BUSINESS INSIGHTS Notable amongst its leading Japanese company peers.6 12. launched generic donepezil in November 2011. 72 lines Kyorin Rimedio 8. Astellas. set up 103 . 279 lines 12. FY2010 Company Sales (¥bn) Year-on-year growth (%) Number of generic registrations Meiji Seika 18. one of the R&D majors. Distributor presence Alfresa HD.7 37 APIs.  Dainippon Sumitomo. a presence in all Japan‟s prefectures and a plan to open 150–200 new pharmacies per year over the coming years. has as one of its subsidiary companies Alfresa Pharmaceutical Corporation which manufacturers and markets generics. Nihon Chouzai. premature expectations that the Japanese generics market would take off) and these triggered M&A activity. Nihon Generic. Boehringer Mannheim (Toho).54m). Rorer (Kyoritsu). but this was primarily to acquire local production capacity (prior to the change in the law to allow contract manufacturing). which also acquired the Mohan Medicine Research Institute from Kyowa Hakko in 2002. The Ain pharmacy chain has its own wholesaler WSS which sells generics to non-affiliated pharmacies. but in turn Cox Japan was resold to Hexal in 1999 and restructured as Hexal Japan. Solvay acquired Kowa. A consortium of 37 wholesalers created their own generic manufacturing subsidiary. expanded production capacity and provided a local development unit.7% increase in sales in the first half of FY2011 but posted an operating loss of ¥282m ($3. Merrell Dow (Funai). Multinational presence Several research-based companies from Europe and the US – including AstraZeneca (with Hoei).e. Since then there have been several “false dawns” (i. only to sell it on to Taiyo four years later. formed in 1996. This reported a 9. Sanmedith. In contrast.a marketing subsidiary. and UCB (Choseido) – bought into Japanese generic firms several decades ago. wholesaler Sanseido dissolved its generics subsidiary. 104 . This last move doubled medical representative numbers for Merck Hoei. Boehringer Ingelheim (Yamaguchi). Nihon Generic sells to pharmacies outside its own chain as well. The 1994 acquisition by Hoechst of RPR Rorer Japan‟s Berk generic division and its transformation into Cox Japan was supposed to mark a turning point. AstraZeneca sold Hoei to Merck KGaA in 1998. Nihon Galen Union. importing. Lupin India Acquired 100% of its former partner. Launched a generic presence in June 2011 with a copy of Dainippon Sumitomo‟s injectable broad spectrum antibiotic Meropen (meropenem). Mylan US Acquired Merck Seiyaku from Merck KGaA (2007) rebranded as Mylan Seiyaku. Importing. now part of Teva. Strategic alliance with Nipro Corporation for cross-licensing and co-development (2011) though each company announced it would continue to operate independently in Japan. Actavis Aska (2009). Aurobindo India Subsidiary established in 2008. marketing. Fresenius Kabi Germany Alliance with Meiji Seika to market generic anticancers. Covers importing. Ranbaxy India Nihon Pharmaceutical Industry created as 50:50 joint venture with Nippon Chemiphar (2002) – terminated in 2009 when Nippon Chemiphar acquired Ranbaxy‟s share. Ranbaxy itself acquired in 2008 by Japanese R&D major. Kyowa Pharmaceutical Industry (2007). Glenmark US Deal signed with Teijin Hospira US Entered Japan in 2006. marketing. importing. Manufacturing. Daiichi-Sankyo. a privately-owned company.1bn acquisition of I‟Rom (2011). Launched Japan‟s first biosimilar (2009). Joint venture with Fujifilm in 2011. leading to the creation of Daiichi-Sankyo Espha. Source: Author‟s analysis BUSINESS INSIGHTS 105 . Made second foray with ¥3. Covers marketing. Orchid India Japanese subsidiary established (2008).Table 28: Generic market entrants from overseas: evolution and current status Company Primary Location Details Actavis Iceland 45:55 joint venture with Aska. marketing. Dr Reddy‟s Laboratories India Tokyo representative office opened in 2008. Plan to integrate Aska‟s generic business into joint venture. Covers manufacturing. Tie-up with Taiyo. Sandoz Switzerland First entered Japan 2006. marketing. Pfizer US Pfizer Japan created an Established Products Division in 2009. Mainland Chinese companies have as yet not entered the market. shares in Taisho (2010). Cipla. though Taiwanese firms like ScinoPharm and Yung Shin have passed a GMP inspection by Japan‟s PMDA with the aim of supplying APIs. which is designed to boost bilateral trade between the two countries and specifically targets pharmaceutical trade. the Comprehensive Economic Partnership Agreement. Indian generic companies are well represented in Japan.g. Further acquired 100% of Taiyo (May 2011) and obtained the remaining 50% share in Teva-Kowa (September 2011). and indeed six such firms have set up the India-Japan Pharmaceutical Alliance as a local association in Tokyo. Source: Business Insights BUSINESS INSIGHTS Of the global top-10 generic company players it appears that only Watson and Stada have no direct presence in Japan. Yung Shin has also signed a memorandum of understanding with Japan‟s Wakomoto designed to strengthen their collaboration in entering the Japanese generic market and have expressed their intent of forming a joint venture there. Hospira. 50:50 joint venture with Kowa (2008). though some have yet to fulfill their potential. Covers importing. Sun). the world‟s leading generic injectables company. Teva-Kowa. Indian companies With some exceptions (e. offers a mere 11 molecules in Japan. for example. Acquired 100% of Nippon Universal Pharmaceutical (2007). Covers importing and marketing.Table 29: Generic market entrants from overseas: evolution and current status (continued) Company Primary Location Details Sanofi France Joint venture 51:49 with Nichi-Iko (2010). rebranded as Zydus Pharma (2010). which markets 138 generic APIs in the US. Zydus Cadila India Tokyo office opened (2006). 106 . marketing Teva Israel Opened Japanese subsidiary in 2005. This followed the February 2011 signing of an Indo-Japan trade pact. 125 export markets.9% stake for ¥490bn ($4. Culture clashes were to be expected after the takeover as Daiichi Sankyo was highly conservative. ground operations in 49 countries and production facilities in 11 . Ind-Swift has received PMDA approval for two products. resigned in 2009 and CFO Omesh Shah left in January 2011. and increase co-operation between its members and Japanese companies in the field of contract manufacturing and supply of APIs and intermediates.87bn. Lupin. supported by the Indian Embassy. 2011).2bn) in cash. Critics point to the fact that Torrent did not choose to partner with a Japanese company. Ranbaxy. Since June 2008. In fact.with 2010 consolidated sales of $1. Within three weeks of the deal. of the founding family. the FDA banned imports of 30 Ranbaxy generics into the US due to GMP violations at two of its Indian plants. The plant was later closed permanently. Commercial production of liquid formulations ceased at a US plant after the FDA found evidence of lapses in quality control and the manufacture of unapproved drugs. Torrent Pharmaceuticals marks the only known exit by a company from the subcontinent. after the latter obtained a 63. Ranbaxy CEO Malvinder Singh. Dr Reddy‟s Laboratories. Orchi. There are plans to invite senior figures in the Japanese pharmaceutical industry to India for inspection tours of production facilities Aurobindo.was originally formed 50 years ago to act as an Indian distributor for Japan‟s Shionogi. It opened a subsidiary in Yokohama in 2006. Ranbaxy . and later determined that it was falsifying reports. Daiichi Sankyo. Strides Arcolab. problems surfaced in the acquisition almost immediately. 107 . Ranbaxy has been majority owned by another Japanese major. only to close two years later.The aims of the Alliance. and unused to the very different ways that generic companies did business. and Zydus Cadila each has a direct presence. which analysts put down to a lack of proper due diligence by Daiichi Sankyo (Wall Street Journal. even by Japanese standards. are to expand the overall market for generics in Japan. and both Nectar Lifesciences and Elder have obtained Japanese accreditation for their API plants. several new regulatory inspections have been performed without issue. the leading Japanese photography and imaging company. manufacture and marketing of generics in Japan. Kyowa Pharmaceutical Industry in 2007 and I‟Rom in 2011. took another step into the pharmaceutical business in 2011 with a joint venture with Dr Reddy‟s Laboratories. with the first products from the joint venture expected to be launched within three years. the Economic Times. Both companies subsequently denied that talks were taking place.13m) to help victims of the March 2011 Great East Japan Earthquake. The two firms are planning to collaborate on the development. with production to be undertaken by the company‟s Ohm Laboratories unit in New Jersey. Lupin donated ¥10m ($0. and Takeda declined to comment. Ten new product launches are planned for FY2011. but there are signs of an improvement. With two local generic company acquisitions. modified release dosage form specialist Lupin is definitely an Indian company looking to make its mark on Japan. reported in summer 2011 that Takeda was planning to follow Daiichi Sankyo with an acquisition of a generic pharmaceutical business on the subcontinent. US. Through Kyowa. Company profiles Fujifilm Fujifilm. Marketing approval was gained at the end of November 2011. which focuses on oral CNS drugs. 108 . R&D operations have been integrated. now accounts for 11% of Lupin‟s total sales. and co-operation on product development for Daiichi Sankyo‟s new Espha division in Japan is planned. The Indian business daily.Ranbaxy‟s woes impacted on the consolidated profits of Daiichi Sankyo. I‟Rom is an injectable generic specialist. Ranbaxy was notably also first to file for generic atorvastatin in the US. Kyowa. The targets named were Cipla (India‟s leading pharmaceutical company) or Lupin (ranked 5th). Merger with Kyowa would expand the latter‟s product line-up for DPC hospitals and triple the number of its medical representatives targeting these facilities. in which the Indian company has a 49% stake. gaining 180 days‟ exclusivity in the process. new US launches undertaken. giving it a 4.1bn ($58m) in 2009. Sanofi-Aventis Nichi-Iko. Just prior to the Dr Reddy‟s deal it acquired Merck/MSD Biomanufacturing Network (UK. Nichi-Iko Nichi-Iko is forecasting FY2011 sales of ¥78bn ($1bn) and net profit of ¥4bn ($50m). 625 employees and offers 555 generic presentations plus a range of long-listed originator brands acquired from both Sanofi (e.5bn) by 2019. The creation of a new subsidiary.5 million shares in Nichi-Iko.41bn ($48. Nichi-Iko seems determined to cement relationships with wholesalers as part of its strategy to target hospital groups and head offices of pharmacy chains.g. first bought into the pharmaceutical API business via the purchase of Toyama Chemical in 2008. furosemide. approved in 2009 with Pfizer‟s Genotropin as reference product. amitriptyline. ifenprodil) and Merck & Co (e. which has targeted healthcare sales of ¥1 trillion ($12. dexamethasone). initially edaravone and donepezil. The French company also agreed to pay ¥4.7m) for more than 1. A joint venture in Japan.g. Recognising the importance of distribution. in which Sanofi has a 51% stake. was announced for this specific purpose in 2011. Sanofi-Aventis Nichi-Iko is also co-promoting Nichi-Iko‟s generics. the recombinant human growth hormone Somatropin BS (somatropin). Sandoz Sandoz.66% holding. One of the first tasks of the joint venture was to take over Japanese marketing rights to Sanofi‟s Amoban (zopiclone) and use Nichi-Iko‟s network to promote and distribute it. including the country‟s first biosimilar.Fujifilm. The hypnotic had sales of ¥5. extending this the following year to include biopharmaceutical contract manufacturing.500 medical representatives are involved. was created in the first half of 2010. It has five production facilities in Japan. US) and RTP (US). Both products had the same 109 . the generics division of the Novartis group. and a joint venture with Kyowa Hakko Kirin to develop and manufacturer biosimilars has been announced. It is not know how many of Sanofi‟s 1. the Nichi-Iko Medical Business Management Research Institute. began operations in Japan in 2006 and markets over 150 products. It set up a generic joint venture with Mitsubishi Corporation in 2010. therapeutic indications, i.e. child growth hormone deficiency and growth disorders linked to Turner‟s syndrome or chronic renal insufficiency. Sales of Somatropin BS, whilst not disclosed by the company, were estimated by the JGA as only ¥100m ($1.1m) in 2010, which would probably be viewed as disappointing. Sandoz‟ generics business in Japan has been largely built on the former operations of Nihon Hexal (originally Kyoritsu Yakuhin), whose parent was acquired globally by Novartis in 2005. As well as its position within the Novartis group, experience in both the commodity and branded generics sectors, Sandoz KK now emphasizes to customers an ability to draw upon a development and production network spread across five continents, plus extensive post-marketing surveillance data on its products from overseas. It has about 260 employees. On a US dollar basis, sales in Japan rose 39% in 2009, 38% in 2010, and 30% in January-September 2011 (attributed in part to the successful launch of pioglitazone), exceeding the market growth rate by more than three-fold, a press conference was told. The company expects to enter the top-10 rankings of generic companies there within three to five years. A strategic alliance for development and promotion of generics in Japan with Osaka-based Nipro Corporation was announced in 2011. The two companies have pre-existing ties in that Sandoz Japan markets a fast dissolving version of the antihistamine ebastin, which is produced by Nipro‟s manufacturing subsidiary, Nipro Genepha. Secondly Sandoz Japan and Nipro co-promote Cilosinamin (cilostazol), a generic version of Otsuka‟s Pletaal. Sawai Osaka-based Sawai, recorded sales in FY2010 (12 months ending March 31, 2011) of ¥63.9bn ($0.75m, +27.5% on prior year) and operating profit of ¥13.6bn ($160m, +59.5%). It had 912 employees, including 392 medical representatives, eight branches and 11 sales offices nationwide, a generic portfolio of 550 presentations, and 44 new products gained regulatory approval in the year. By therapeutic category the largest turnover came from cardiovascular drugs (¥17.3bn) and from gastrointestinal drugs (¥10.9bn), though at ¥2.5bn (+49%) anti-allergics showed the strongest growth. 110 “Generic Drug of the Year Award 2011” from the JGA came in recognition of Sawai developing and launching in May 2010 an oral dispersible tablet form of the anti-allergic cetirizine hydrochloride. The award was in recognition of the formulation technology and new dosage form unavailable with the originator brand. Customers numbered 7,389 hospitals (of which 1,309 were DPC hospitals), 32,426 self-dispensing clinics and 48,459 dispensing pharmacies. Pharmacies, the fastest growing part of the generic market, accounted for 60% of total sales, clinics for 20% and DPC hospitals for 8%. Sales through wholesalers have grown steadily in recent years and in FY2010 amounted to ¥30.9bn (+40%) with ¥28.4bn (+16.1%) going through hansha (sales agents). Sawai manufacturers most dosage forms itself (including tablets, capsules, granules, injections and ointments) but contracts out production of eye ointments, transdermal patches and inhalers. The Kyushu plant of subsidiary Medisa Shinyaku is to be transferred to Sawai in April 2012. The company also announced that is to invest ¥10bn ($125m) building a new solid dosage form plant at its existing Kanto facility in Mobara city, Chiba prefecture. This is expected to come on stream by Spring 2013 and have a production capability of 2bn tablets annually. Sawai Group‟s current production capacity is 6bn tablets/year. The company is forecasting sales of ¥72.5bn (+13.5%), operating income of ¥14.5bn (+6.7%) and net income of ¥8.3bn (+15.5%) in FY2011, and expects by then to have 425 medical representatives of which up to 100 will be dedicated hospital medical representatives. Sawai is only one of five generic companies so far to have introduced atorvastatin 5mg and 10mg tablets, and it targeting a 6% volume market share of the molecule by March 2012 and eventually sales of ¥10bn/year. Sawai has set itself the aim of achieving consolidated net sales of ¥100bn by FY2013. Thereafter, prerequisites for further growth, according to the company, are involvement with anticancer drugs, a biosimilars strategy, and an alliance strategy. It is considering the last-named from three perspectives: To enter overseas markets, for new business including biosimilars, and the realization of a hybrid company involved in both new drugs and generics. 111 Teva Teva, now the world‟s largest generics company, first entered Japan through a joint venture with Kowa in September 2008. With just seven employees at the beginning it announced a headcount rise to 200 when full operations commenced in January 2010. The joint venture posted sales of ¥18bn ($210m) in its first fiscal year. Teva‟s initial strategy was to capture as much of the domestic generic market as possible through TevaKowa. The joint venture then bought a stake in the leading Japanese OTC company Taisho. The decision by Kowa to integrate Taisho‟s sales and marketing division into Teva-Kowa reportedly led to a rift between the partners, and in May 2010 the Israeli company effectively announced that it had a new strategy for Japan by acquiring a 57% stake in No. 3 generic company Taiyo for $460m in cash. Teva then purchased all outstanding Taiyo stock from the founding family and other shareholders by July 2011for a total investment of $934m. In September 2011, just three years after Teva-Kowa was formed, Teva announced it was paying out $150m to acquire the 50% interest held in it by Kowa. By then Kowa also had started to look for a new partner for its generic business to complement its interests in new drug development and OTCs. Taiyo had FY2011 sales of ¥51.4bn ($645m) and two manufacturing facilities in Japan, including the Kasukabe (Saitama prefecture) plant acquired from Schering-Plough in 2009. It lists over 550 presentations across a wide range of therapeutic areas and dosage forms, and is especially strong in hospitals due to several injectable product offerings. Teva-Kowa achieved sales of ¥18bn in its latest fiscal year ending December 2010. The two companies will be merged and restructured as Teva Pharma Japan Inc in mid2012. The move for Taiyo, which came only days after Teva spent $6.8bn in purchasing Cephalon, will allow Teva Japan to reach its 2015 target of ¥100bn ($1.25bn) in sales and doubling its market share to 20% ahead of schedule, CEO Shimo Yanai said. Local observers, however, are more cautious, pointing out that almost all sales will initially come from products of Taiyo and Taisho, as Teva itself - despite its world No.1 ranking - is not well known in Japan. 112 There are plans for a 24 hour/seven day drug information center and supply service to core hospitals. The rise in direct sales has resulted from the conversion of sales agents to sales offices and the opening of new offices. 113 . 506. The company offers 537 generic lines (including orodispersible tablets of amlodipine.limited to Taiwan only. Towa is forecasting sales of ¥48bn (+4%) and operating profit of ¥8.40bn (-13%) for the year ending March 31st 2012. lansoprazole and pioglitazone) and already employs the largest number of medical representatives amongst generic companies.Towa Just under half of sales currently result from distribution through 41 branch offices and over 80 hansha or sales agents to the dispensing doctor and small hospital market. Exports Apart from Daiichi Sankyo‟s Ranbaxy and overseas sales by Sawai – through a subsidiary company Pharmex . Okayama and Yamagata) to provide flexibility in case of disasters while a new earthquake-proof plant for injectables is being completed at the Yamagata site. with a plan to grow this number further to 600 in FY2013. export earnings by domestic companies are virtually nil. Production of oral dose forms is spread across three plants (Osaka. and working towards the aim of a zero out-of-stock situation. ensured quality and appropriate provision of information. extending the patent life with new indications.  Generic awareness campaigns have been run by the industry association for many years and in 2007 the JGA initiated its “Reliability Improvement Project” for members focused on continuous supply. line extensions. self-dispensing GP clinics. and misinformation campaigns run by medical representatives. Product portfolios now include added-value generics and long-listed brands.Chapter 7 Generics company strategies and generics defense Summary  The leading generic companies are expanding their production capabilities. collaborating to ensure portfolio gaps are filled. Medical representative numbers are being increased to detail both doctors and pharmacists. Chain pharmacies are a particular target. Others are keen to support their business in the traditional market for generics. 114 . knowing this is the key to access DPC hospitals and dispensing pharmacies.  Generic companies classify generic defense strategies by innovators into four groups: patent litigation.  Many firms are trying to get their brands stocked by the big nationwide wholesalers. in particular fixed-dose combinations. The race is on to see which company can first break through the symbolic annual generic sales target of ¥100bn ($1. 115 . Towa‟s focus in contrast remains the self-dispensing clinic market served by hansha (sales agents). in many cases to 200+ and in a few cases to 400+. MRs in Japan are also required for data collection in post-marketing surveillance. low in chain pharmacies and DPC hospitals. exports remain a low priority. and high in independent pharmacies. The biggest growth area in the market is chain pharmacies. others are putting greater emphasis on provision of contract manufacturing services. knowing this is the key to access DPC hospitals and dispensing pharmacies. The result is a large price spread with some products.By generic sector Generic companies The major domestic generic companies are certainly showing confidence in the future by greatly expanding their production capabilities. Following the 2005 revision to the Pharmaceutical Affairs Law. Grey market trade is growing and has to be monitored closely. Sanwa and Tatsumi Kagaku. Smaller generic companies need a minimum of 200 lines and larger companies 500.28bn). Most companies have boosted their MR numbers. Several firms are striving hard to get wholesalers to stock them. All companies are making great efforts to assure users of the quality of their products and to dispel the poor reputation that generics have had in Japan for years. especially Taiyo. so as to detail both doctors and pharmacies. with its reputation for tough price negotiations. The size of a product portfolio is important. Nipro/Hishiyama (for injectables). and the likes of Nichi-Iko and Mylan have set up dedicated sales teams to tackle this sector. This is primarily to meet the needs of the domestic market. Competition has increased greatly over the past five years following a move into generics by several R&D firms and more especially by a move into Japan by most of the world‟s major generic firms. temperature.Generic firms no longer just market generics. rather than just producing copies. they are developing value-added generics (Table 30). neither of which is eligible for reimbursement. Sawai and Towa. This demand has put considerable pressure on the production capacity of companies and many looked to expand their product lines through partnership. This was in response to a February 2011 MHLW 116 . including Nichi-Iko. A few generic companies. sunlight and other conditions Safety improvements New containers that protect against product breakage Switch to syringes with solution filled in advance Clear displays of drug names and standards on the packaging Source: Sawai annual report BUSINESS INSIGHTS Generics are no longer limited to products listed on the NHI tariff. hard-to-swallow tablets Sugar and film coating to mask bitter taste Easier prescription and dispensing Tablets with break lines that make them easier to split Improved resistance against humidity. regardless of their sales potential. Fuji Pharma has introduced a combined oral contraceptive and Aska a levonorgestrel-containing emergency contraceptive (“morning after pill‟). Should a generic company choose to compete against a particular dosage form of an originator brand then it will be required by the MHLW deadline of end March 2013 to market all strengths of that dosage form which are already available from the innovator. hard-to-swallow capsules made into tablet form Miniaturization of large. Several have acquired under license off-patent original products (long-listed brands) from their innovators. Nichi-Iko. announced they would collaborate on development to ensure all gaps in their portfolios were filled. have made regulatory applications for additional indications for their products based on information in the public domain. often with features not found in the originator brand. Table 30: Representative value-added innovations from Sawai Objective Result Easier administration Large. Additionally. for example. JGPMA‟s successor . Generic industry associations Industry-wide initiatives were pioneered by the former JGPMA. It urged its members to achieve within a certain time frame stable supply.the Japan Generic Medicines Association (JGA) . as patients were often too shy to voice such a request.notification to file such applications in the case of drugs used off-label for unapproved but medically important indications.initiated its own “Reliability Improvement Project” in August 2007. Patients must present their insurance card when seeking treatment under NHI. A few years later the Japan Society of Generic Medicines created a new insurance card cover containing the words “I prefer generic medicines”. creating a one-year “insurance lag” for generics (six month delay for PMDA approval and another six month delay for NHI price listing vis-à-vis originator brands). Getting NHI coverage at the same time as originator companies for new indications of major established molecules like cisplatin (annual sales ¥4. is seen as important despite the higher review fees levied by the PMDA for this approach. The JGPMA conducted its own independent testing of member company products. Focusing on three targets – steady supplies. ensured quality.5bn). information provision and quality standards. The Association also wanted to see prescribing amendments listed on PMDA‟s information system within three weeks of any change. and planned to disseminate the results to medical institutions. public domain applications could only be filed by originator companies. Until recently. A generic awareness campaign for the public by JGPMA included “I want generic” cards for patients to carry to ask the pharmacy to dispense a generic substitute. where generics account for about two-thirds of sales volume. next day deliveries to wholesalers by the end of fiscal 2007 (with 75% achieving same day delivery a year later). and appropriate provision of information – actions taken included:  posters and educational DVD for the general public  advertisements in wide circulation newspapers and medical journals  generic request card to show to doctors and pharmacists 117 . In response to MHLW‟s Action Program. and a zero out-of-stock situation by the end of fiscal 2009. plus direct links to company websites. to request and search capabilities. the marketer or manufacturer‟s names. Healthcare professionals have access to more detailed information. When a visitor to JGA‟s website asks about a product by non-proprietary or brand name. creation of members‟ quick reference table for placing orders  co-operation with local governments  investigation of supply capability of members  support to member companies for stable supply  literature review on the quality and clinical evaluation of generics by health professionals  investigation of timeliness and adequacy of statutory reports and data provision  creation of a training program for medical representatives on better provision of information specific to generic medicines. Counterstrategies by innovative manufacturers Generic companies classify generic defense strategies by innovators into four groups: 118 . The latest JGA initiative. quality assurance and information provision. the association announced. A new electronic network linking JGA‟s website with that of each member company was launched in April 2010 to provide basic information on generics to healthcare professionals and patients alike. and current reimbursement prices to allow comparison between the originator and its generics. This came in response to the suspension of operations at Taiyo‟s Takayama (Gifu prefecture) plant for violations of the Pharmaceutical Affairs Law that came to light in 2010. was to issue model guidelines for behavioral standards of its member companies. JGA member companies failed to achieve the no-shortage target of MHLW‟s Action Program in FY2010. the system shows a list of preparations with the same active ingredient. While goals were achieved in terms of stable supply. in July 2011. 119 . The share of prescriptions received by its pharmacies that specify “no substitution permitted” is almost half and rising. in particular fixed-dose combinations  misinformation campaigns. Every medical representative promoting an originator product facing generic substitutes will ask the doctor to routinely sign the column on the prescription form to prohibit substitution. Despite the tide of generics innovator companies have rarely felt threatened by them. higher than for other pharmacy chain operators. patent litigation  extending the patent life with new indications  line extensions. Even when there were large numbers of heavily-discounted alternative options to choose from. Oral fixed-dose combinations have become one of the most popular line extension strategies (Table 31). was due to some manufacturers making research funding to hospitals conditional on marking prescriptions in this way. the original brand has seldom seen volume sales erosion by more than 5–10% in the first few years. combinations benefit from the six-year monopoly period for regulatory re-examination. and prescriber loyalty to brand name firms regularly reinforced by visits from reps and by publication of new clinical trial results. These four strategies have been effective. Due to its policies of aggressively seeking high discounts from suppliers on generics and encouraging patients to switch to generics whenever their prescription permit it. Major factors in low generic uptake have been distrust in them by doctors and patients. As well as any new formulation patents. lack of enthusiasm shown by pharmacists. major pharmacy chain Nihon Chouzai complains of being targeted by innovative manufacturers. according to President Hiroshi Mitsuhara. at least not until now. he alleged. This. The JMA is invariably hostile and even pharmacists are lukewarm to the idea. The co-marketed originator brands – Pfizer‟s Norvasc and Dainippon Sumitomo‟s Amlodin – recorded sales 120 . This is a reflection of the ultra cautious stance on drug safety taken by both the authorities and patients. Usage had been boosted by a midDecember 2010 decision that the limit of prescribing no more than 14-days supply of any new oral treatment during its first year of marketing did not apply to combination products.Table 31: Examples of combination products launched around the time of patent expiry of one component Brand Company Ingredients Caduet Pfizer amlodipine + atorvastatin Exforge Novartis valsartan + amlodopine Liovel Takeda pioglitazone + alogliptin Metact Takeda pioglitazone + metformin Micamio Astellas/Nippon Boehringer Ingelheim telmisartan+ amlodopine Rezaltas Daiichi Sankyo olmesartan + azelnidipine Sonias Pfizer ioglitazone +glimepiride Unisia Takeda canesartan+ amlodopine Xalacom Pfizer latanoprost + timolol maleate Source: Pharma Japan BUSINESS INSIGHTS A survey of hospital usage in January 2011. Molecule case studies Amlodipine The first generics of the blockbuster anti-hypertensive amlodipine were included in the NHI tariff in July 2008. switching prescription brands to allow OTC sale (suicchi OTC-yaku) is a strategy less frequently employed by originator companies in Japan compared with most western countries. found several combinations amongst the products most subject to new prescriptions. As patent life on the active ingredient nears its end. All switch OTCs are pharmacy only. published in the trade magazine MIX. (NHI price basis) totaling ¥200bn ($1. While there were 34 separate generic versions. Amlodin OD.7bn) in the previous year. as shown in Table 32. The orodispersible form had a formulation patent which was challenged unsuccessfully by some generic companies. according to Ranbaxy. 2009). at least in the short term. Prior to generic entry. Pharmacists were not allowed to substitute this with a conventional tablet of generic amlodipine. Pfizer‟s co-marketing partner for Norvasc. The line extension strategy by the originators appeared successful. meant it became the first non-Japanese company to develop a generic independently outside Japan and receive marketing approval from the MHLW. 121 . Amlodipine‟s approval. Finished production of the Sandoz and Ranbaxy generics was undertaken in Turkey and India respectively. The company decided to commercialize the product through I‟rom Pharmaceuticals rather than with the joint venture it had at the time with Nihon Pharmaceutical. though these represented 18 distinct products (Japan Generics Journal. Dainippon Sumitomo. 2009). making it Japan‟s second largest-selling molecule at the time. A February 2009 report estimated total generic penetration of the molecule at that time at only 20% (Japan Generics Journal. had its own orodispersible amlodipine.400 medical representatives were mobilized to promote it. Among 34 companies entering the market with generic forms of the drug in 2008 were two research-based Japanese firms – Mitsubishi Tanabe and Meiji Seika – and two foreign-affiliated generic firms. Sandoz and Ranbaxy. Meanwhile. Pfizer had received regulatory approval for Norvasc OD (orodispersible tablets) and all the company‟s 2. competition between generic versions led to their swift NHI price erosion. 9 45. has obtained marketing authorizations with Aricept 3mg and 5mg tablets for mild.7 -29 Taiyo 52. and with 10mg Aricept tablets for severe forms of the disease only.Table 32: Change in NHI prices of selected first wave generics of amlodopine 5mg tablets. The Supreme Court ruled in September 2011 against eight generic manufacturers.2 -15 Towa 52. in their appeal of a previous ruling by the Intellectual Property Court that recognized the validity of 122 . Eisai. By July 2011. including Sawai and Nichi-Iko.7 -10 Tatsumi Kagaku 52. Donepezil The originator company. gathered over many years. 2008–10 Generic supplier Per tablet launch price (July 2008). following expiry of the basic patent.9 -43 Source: Nomura Japan BUSINESS INSIGHTS Clarithromycin Taisho‟s strategy of providing doctors with data on the safety and efficacy of its originator brand. ¥ Per tablet April 2010 price.8 -21 Nichi-Iko 52.2 -15 Sawai 52.9 41.9 29. moderate and severe Alzheimer‟s disease. together with a new line extension (dry syrup for pediatric use) paid off.9 45.9 47. Clarith.9 37. 115 generic versions of various strengths of donepezil tablets from 33 companies had received regulatory approval with listing in the November 2011 tariff expected.9 44. ¥ 2008–10 change.2 -16 Medisa Shinyaku 52. % Nipro 52. as the volume share of other clarithromycin versions between July and December 2006 was only 10% (and this share included sales of Abbott‟s Klaricid as well as generics). ¥ 2008–10 change. are very different.2% and 4.5bn in FY2010 (+12. As part of its generic defense strategy in Japan the company is stepping up provision of information on the product‟s patent situation to pharmacists.19bn in the same period the previous year. 123 .7 34.7 18.7 9. Prices of generics from the leading suppliers have fallen by up to 84% since. Many health insurance pharmacies are expected to be fearful of litigation if they dispense 3mg or 5mg generic donepezil tablets in cases where the patient has severe Alzheimer‟s disease. NHI price applications for the10mg strength of donepezil were cancelled.7 15. where the basic product patent for donepezil has also expired. but Gaster sales in 2002 and 2003 declined just 5. Not only does Eisai expect to maintain domestic sales of its leading brand – ¥105.8%) until 2013. ¥ Per tablet April 2010 price. Famotidine Yamanouchi‟s Gaster (famotidine) faced competition from 27 generic companies when the first copy versions were all tariff-listed in July 2002. it is forecasting growth to ¥140bn in FY2011 from the wider indication.6 -84 Taiyo 58.5 -68 Toho 58.8 -81 Sawai 58. The Japanese patent will therefore remain valid for this indication until June 22nd 2013. % Nipro 58. Table 33: Change in NHI prices of selected first wave generics of famotidine 20mg tablets. 2002–10 Generic supplier Per tablet launch price (July 2002). Eisai announced.a patent extension for Aricept for an additional indication of severe Alzheimer‟s disease. Aricept sales in the first half of FY2011 were $92m compared to $1. Gaster retained its top-four ranking in the Japanese market and held a 97% share of sales of the molecule. Even by 2006.2 -42 Source: Nomura Japan BUSINESS INSIGHTS Gaster was first launched in Japan in 1985. with an additional 11 new generic versions introduced in that year alone. Results in the US.4% respectively. Hospira. Iopamiron‟s sales and market share of the molecule by value held up well. iopamidol (Iopamiron. a manufacturer of X-ray films. Further advantages over other generics were that Oipamiron offered the fullest range of specifications and had published results of a usage survey demonstrating the safety of its brand. The first generics appeared in July 1996 and soon there were eight copy versions marketed by Fuji Seiyaku. Sawai. and partly because of safety concerns with high volumes of contrast media infused. The generic pricing rule at the time required the first generics to be 20% below that of Iopamiron‟s prevailing NHI price. Taiyo and Towa. The only generic to make serious inroads into Iopamiron‟s domination was Fuji‟s Oipamiron (¥5.Lopamidol The originator brand of the non-ionic contrast medium. Several admitted to “gaming the system”. many radiologists did not make the shift to generics. By 2009. Despite the competition. and well known to Japanese radiologists. 124 . at ¥27bn ($290m. Nichi-Iko. was launched in Japan in June 1986. using the original brand for outpatients (remuneration based on fee-forservice) and keeping generics for inpatients (DPC remuneration). This was partly because they valued the information and support offered by the originator manufacturer. the company was thought to have achieved Oipamiron usage in most DPC hospitals.3bn sales and 16% molecule market share in 2009). Schering AG). Defying forecasts about the impact of DPC hospital reimbursement. or even reclassifying inpatients as outpatients One reason for Fuji‟s relative success was that it had a tie-up with Konica Minolta. at NHI prices) and 81% respectively in 2009. Mylan. Hikari. Pioglitizone Among the four active ingredients included in the June 2011 tariff listing for the first time as generics were 50 presentations from 18 companies of pioglitizone.741 -5. Source: Maurer (author communication) BUSINESS INSIGHTS Cumulative NHI price reductions over this period are almost double with generic versions compared to the innovative brand.452 -7. % 1996 5.843 -11.946 -10.300 -4.770 -4 2006 3.2 1. it is not surprising that several would appear to have exited the market.2 2.538 -12. ¥ Y-o-y change.2 1. marketed by Japan‟s leading pharmaceutical company Takeda had FY2009 sales of ¥52.7 1.% repricing this year as a result of expanded sales volume.7bn ($570m).1 * all non-ionic contrast media were subject to a -12. Originally.359 -24.7 2000 4.928 -10. ¥ Y-o-y change.8.3 3. Given that generics start from a lower price base.Table 34: Change in NHI prices (¥) of Iopamiron (150 strength. also from Takeda.6 2. but there are reports that after 125 . more generic companies were planning to compete with versions of their own as soon as possible.079 -22 2002 3.2 1998 4. making it the second-largest selling oral antidiabetic in Japan after Basen (voglibose). Oipamiron.430 - 1997 5.4 2004 3.603 -3.6 1.709 -11.392 -6.663 -6 2008 3.8* 4.258 -5. Pioglitazone‟s substance patent expired on January 9th. Actos. 50ml) and leading generic version. The originator product. % Price. 1996-2010 Lopamiron Oipamiron Year Price.6 2010 2. 2011.664 -20. pioglitazone generics were approved from Kyowa Pharmaceutical. Nippon Chemiphar. To complement Actos. as unlike “pay for delay” in the US no money changed hands. no pioglitazone fixed dose combinations were price listed in June 2011. A survey of 205 pharmacists in community and hospital pharmacies by Nextit Research Institute found that more than 10% had made the switch to using generic pioglitazone in the first week of its availability. including Sawai. Nissin Pharmaceutical. a company spokesman explained. applied to have them invalidated by the Japan Patent Office on the grounds of obviousness. observers comment. this type of arrangement would not be illegal under local antitrust rules. according to local press reports. As well as Sawai. Mylan. voglibose and acarbose were valid. Takeda has a range of products containing combinations of pioglitazone with other antidiabetic drugs. 126 . amongst others.discussions with Takeda they agreed to delay their generic launches for one year. and a number of generic companies. Confidence over the patent situation with Actos. and concerns over the numbers of competitors that would enter the market later were the deciding factors. It is not known whether the patents Takeda was claiming covered both fixed dose combinations and combinational use of monodrugs. and several – including Nippon Chemiphar and Nissin Pharmaceutical – for the orodispersible tablet form also. The Office reportedly determined in 2010 that whilst patents for pioglitizone combinations with glimepiride. and Sandoz. Takeda challenged this ruling and in the first half of 2011 the company filed lawsuits with the Tokyo and Osaka district courts against companies planning to sell generic versions of its fixed dose combination pioglitizone brands. Takeda agreed not to take any legal action against the firms concerned. In return. Metact (pioglitizone + metformin) and Sonias (pioglitizone + glimepiride) claiming patents valid until late in 2017. In any event. Patents on these combinations are difficult to interpret. All received an NHI price for both the 15mg and 30mg tablet strengths. allied to high stock levels of its own generics. If confirmed. Sawai was one company that went ahead with its planned launch of pioglitazone after the June 2011 tariff listing. that for the combination with metformin was not. European reports of a small increased risk of bladder cancer associated with use of pioglitizone led to the French regulatory authority to pull Actos from the local market in 2011, with modifications to the product labeling required in other countries, including Japan. Takeda launched a further combination product Lioval (pioglitazone + alogliptin) in September 2011, to be promoted through its 2,000-strong force of medical representatives. Pravastatin Launched in 1989, Sankyo‟s Mevalotin (pravastatin), Japan‟s top-selling brand in 2002, saw only a 1.5% decline in sales despite facing competition from 23 new generic versions in July 2003. Even by 2006, with about 30 competing generics, Mevalotin accounted for 95% of total pravastatin sales, and the originator brand retained its top-10 sales ranking in 2007. At the first price revision after generics appeared (April 2004), the various generics received cuts ranging from 14.4% to 47.7%, while Mevalotin‟s reduction was 11.0% (5% on the basis of the market price survey plus an additional 6% from being a long-listed brand). By the time of the April 2006 revision, a total of around 30 pravastatin generics were listed. Mevalotin received a 9.4% price cut, while the generics averaged 23.1%. Thereafter, 15 generic versions remained. By 2010, NHI prices per 10mg tablet for generics had fallen by up to 82% compared to the time of their introduction, whereas Mevalotin‟s price was down by 31%. 127 Table 35: Recent NHI price erosion with Mevalotin and generic pravastatin, 10mg tablet Year Mevalotin NHI price (¥) Pravastatin NHI price (¥) 2002 163.5 - 2003 163.5 130.8 2004 145.5 68.4 – 111.9 2006 131.4 43.4 – 83.5 2010 112.2 23.2 – 75.4 Source: MHLW BUSINESS INSIGHTS Risperidone Janssen‟s Risperdal entered the NHI tariff in July 1995 and was first subject to generic competition in July 2007 when more than 50 copy versions were priced. Sales of the originator brand – supported by new presentations – actually increased by around 4% at NHI prices that year. Reflecting high discounting in the face of competition from generics and the launch of a rival new antipsychotic – Otsuka‟s Abilify (aripiprazole). Risperdal 2mg did however suffer an 11% NHI price reduction at the April 2008 revision. The tariff price of the 112.5mg capsule form of Abilify was also cut by nearly 10% at the same time. Risperdal was used as price comparator in 2001 when three new antipsychotics entered the market: Seroquel (quetiapine; Astellas), Lullan (perospirone; Dainippon Sumitomo) and Zyprexa (olanzapine; Lilly). The NHI price of Risperdal 3mg was ¥152.40 in 2000, at the 2006 and 2010 revisions it had been reduced to ¥124.00 and ¥98.5 respectively. 128 Chapter 8 Market prospects Summary  2012–2013 presents fewer big new generic opportunities than 2010–2011 did.  The MHLW‟s target for volume share of generics is behind schedule. To achieve 30% penetration by end-March 2013, usage should have been 27% when the biennial survey was last conducted in September 2010. In fact, it was less than 23% and is forecast to fall short of the 2013 target by more than five percent.  The gains achieved after fee restructuring in FY2010 were short-lived, and new, stronger incentives are needed.  The generic industry is divided as to which party – the doctor for recommending their use or the patient through a lower co-payment burden - should be the beneficiary of new financial incentives  A number of changes are likely to be implemented at the time of the April 1st 2012 biennial revision, though they do not consistently favor generics.  To encourage generic usage, when more than 10 applications for the same generic are made (oral forms only) the NHI price will be 60% of that of the originator product, instead of 70% at present.  To reduce price variation between generics, grouping in price bands is planned with reimbursement based on the weighted average market price of the group.  From April 2012 it is likely that if prescribers wish to block substitution they will need to do this on a product-by-product basis.  Changes to the generic dispensation preparedness increments for pharmacies are to be made. Only pharmacies that dispense more than 22% of generics will obtain additional fees, though there will be a new fee for providing patients with written information on the savings they can make from generics. 129 and (ii) their sales of long-listed brands after generics appear. A further two-four years later. Most pharmacists are not enthusiastic about substitution anyway. its market share from any individual supplier is very low. Patients tend not to accept a different product from the one prescribed.  Financial incentives for greater generic use for the doctor.  After just two years on the market. generics have a poor reputation in the eyes of prescribers. 130 . a generic can fall to about half the originator‟s price. the price has become so low that the product is uneconomic to manufacture. whilst allowed. at the time of the first NHI price revision.  Prescribing by non-proprietary name. despite low prices. is at a low level.Introduction In an international context.  Doctors (often influenced by brand manufacturers) block many attempts at substitution. pharmacist or patient are either very limited or absent. pharmacists and patients alike.  At the level of the individual generic. generics have underperformed in Japan.  Hospital pharmacists and pharmacy academics keep a close eye on generics and if any fault is found they are quick to publicize such cases at meetings or in medical journals. and it is not difficult to see why:  In a brand conscious country. and are perceived as second-class medicines.  Healthcare professionals and patients demand high quality products.  Companies that market originator products aggressively protect (i) their prices by keeping generics off the market as long as possible.  Lower prices means lower yakka-sa opportunities for purchasers compared to the originator version. it has limited options to force doctors to prescribe generically or permit generic substitution. In reality. and to force patients to request or accept generics. Table 36: Examples of major molecules expected soon to go off-patent in Japan. to force pharmacists to substitute generics. It has put in place – and invariably soon revised – a series of measures in an attempt to achieve this. It appears that after the boom years. which have resulted in short-term gains. fewer big generic opportunities lie in the immediate years ahead (Table 36). patent expiries. While there have been fee revisions.Generic opportunities The engine of growth of the generics sector in Japan is the same as elsewhere. when many major blockbuster brands went off-patent. 2012–2013 Year INN Originator version 2012 Anastrozole Arimidex losaratan potassium Nu-Lotan Mosapide Gasmotin Olopatadine Allelock quetiapine fumarate Seroquel Paroxetine Paxil rabeprazole sodium Aciphex raloxifene hydrochloride Evista Telmisartan Micardis zoledronic acid Zometa Zolpidem Myslee Pitavastatin Livalo Valaciclovir Valtrex 2013 Source: Business Insights BUSINESS INSIGHTS Further incentives needed The Japanese government has been slow to recognize the savings to NHI that would result from greater generic use. and set a volume target for their use. 131 . 2011). when the share of generics was only 12. such as defined daily doses. generic volume share must rise by about 50% between September 2009 and March 2013. There has been a significant increase since 2002. usage should have been around the 27% level when the biennial price survey was last conducted in September 2010. and the CAGR increase from 2003–2009 was only 0. it was less than 23% at that time. Supporters of generics urge the government to put in place more fundamental reforms. a large part of the gain occurred between 2002 and 2003. especially to the NHI pricing system. education and evaluation of progress are seen as important measures to achieve long-term reform.guidance. while the figures for 2007–2009 were based on surveys by the MHLW that take into account generics marketed by all firms. Iizuka and Kubo (2011) made policy recommendations which they said would not only increase usage of generics but better reflect the interests of patients:  Introduce more threshold points for the generic dispensation preparedness fee.2%. tablets) to a more reasonable volume measure. A 1.  Base the target generic dispensing rate on products which have generic equivalents and not on all products. Pharmacists currently have an incentive to preferentially substitute products where a single dose consists of a large number of pricing units. (The estimates up to 2006 were from the JGPMA and count only the products of the Association‟s member firms as generics. In fact.g. To meet the target of “at least 30%” by end-March 2012. which does not seem realizable.) If the 30% goal is to be attained during FY2012. 132 .8% increase between 2006 and 2007 was seen. but this was largely attributable to a change in data source. many of which will be patent-protected. decrease the size of the increments. from the Ministry of Finance.  Change the measure of generic dispensing rate from pricing units (e. is for generic volume to reach less than 25% by March 2013. The latest forecast.63% (Iizuka & Kubo . However. The growth in volume share of generics to date is behind schedule. These measures were originally proposed by MHLW.  The JSGM is already looking beyond FY2012. is the government‟s last chance to take additional measures to move closer to its target of achieving 30% generic volume usage by end-March 2013. the Expert Subcommittee on NHI Drug Pricing Affairs of Chuikyo seems to have accepted a number of measures impacting generics to introduce in 2012. The current rule for pricing new generics at 70% of the originator‟s price is expected to change to become 60% of the originator‟s price (in the case of oral generics only) when more than 10 applications for NHI listing of generics are made. was cited as one means of achieving this aim. allowing them to offer an attractive yakkasa for a longer period of time. which automatically offers generic name equivalents when the brand name is typed in by the doctor. 133 . Likely changes affecting generics from April 2012 The April 2012 NHI price revision. and are also listed in greater numbers. Wider adoption by medical institutions of prescribing software. Discussion on which party/parties would pay for the necessary system modifications was deferred to future meetings. when pricing rules and medical/dispensing fees can also be revised.  Introduce more stringent equivalence criteria between generics and their originator brands. At the time of writing (December 2011).  Require originator companies to disclose details of excipients used so that generic firms may more closely produce copies. used in countries like the UK. Further promotion of non-proprietary name prescribing. It is proposing MHLW adopts further targets: 40% generic volume share by FY2014 and 50% by FY2016. Create a new pricing rule for generics. such as a floor price. Oral generics were targeted as they generally receive larger reductions than injectable and topical products at their first NHI price revision. This applies also to prescriptions for specific generic brands. will be listed immediately at the statutory minimum price and not have to wait until the following revision for correction to take place. Some medical institutions even have the “no substitution permitted” column printed in advance.The threshold of 10 could either be reached at a single biannual listing or when the combined number of new entrants and existing generics exceed 10. for example. With an estimated 35–40% of multi-item prescriptions (the average form includes 3–4 different items) the prescriber has blocked all substitution by the pharmacist. Generics whose initially calculated NHI price falls below the statutory minimum for that dosage form. One probable measure surrounds prescription forms. It is not yet clear how many price bands there will be. on a product-by-product rather than on a blanket basis. with a single step. block generic substitution for all drugs listed on the prescription form. similar to that used in Germany. Generics priced at less than 20% of the originator drug are currently listed by INN and receive a common NHI price. 134 . This rule will be expanded to include all generics priced at less than 30% of the originator. through application of the inter strength adjustment formula. which requires the prescriber to block substitution. Doctors have already complained that the change will involve them in more work. generics priced at 30% of the originator version or higher will be put into groups with prices varying within a certain range (3%). When the total of new generics and already-listed generics which have already been through a biennial price revision exceeds 10. However. new generics will be priced at 90% of the NHI price of the lowest-priced existing generic. It is possible that the current prescription form will be replaced with a redesigned one. those priced between 20–30% will be listed by their brand not generic name. In addition. To reduce price variation between generics expanded application of the existing uniform pricing rule is planned. This column lets doctors. providing the existing generics had not undergone their first price revision. should he/she so wish. and products in each group will be reimbursed at their weighted average market price. the weighted average market price of the group. By raising the lowest target figure only slightly. The five percent increase in the higher targets is designed to further motivate those pharmacies which already dispense reasonable numbers of generics to dispense even more. The 30-point (¥300) premium that hospitals can earn per admitted patient on the first day of hospitalization if generics account for more than 20% of products on the hospital formulary is expected to be revised. and the generics they carry as stock. from 20% to 22%. 25–29%. The percentage of pharmacies receiving the premium for the lowest (20%+) generic share has remained virtually unchanged over time. it is hoped to encourage those pharmacies – mostly independents . 135 . premium would be paid to hospitals with more than 30% of formulary lines as generics. but increases are likely. there have been calls for pharmacists to receive a new fee to provide the same information. the cost saving from the price differential. as yet unspecified. It is not yet known if the fees themselves will change. The 30% volume generic usage target nationwide will get a little nearer after MHLW decided that crude drug and traditional Kampo herbal medicines will be removed from the denominator in the usage calculation on the basis that neither group has generic equivalents.that currently do not receive the supplementary fee to make the effort to do so in future. 13 or 17) will be increased from their current levels of 20–24%. To offset this there will be a new fee for pharmacies that give patients written information on the availability of a generic option in place of the prescribed brand. This is because MHLW wants to remove both the two-point fee for generic dispensing (¥20 for each dispensing) and the 10-point/¥100 fee awarded when pharmacists get patients to switch to a generic based on a verbal or written explanation. A second.The generic dispensing rates over the previous three months required for pharmacies to receive the additional generic dispensation preparedness increments (¥6. and 30% or more to 22–29%. 30-34%+ and >35% respectively. Only health insurance pharmacies that dispense more than 22% volume as generics will receive any fee incentives from generics after April 2012. Following the success of health insurer efforts to notify patients in their medical bills of the additional savings they could make by switching to generics. slower than expected growth in generics taking market share from long-listed brands. with the impact most felt in areas where there is extensive dispensing of kampo products.3%. multisource reference pricing. MHLW argues for nearer 1% as it is conscious of the importance of long-listed drugs to many leading Japanese pharmaceutical companies. The topic has been raised on previous occasions. which are especially favored by the elderly. based on medical bills processed for a recent month. 136 . the rationale for the reduction will be the same as in 2010. though the amount of the additional cut isn‟t yet known.2%) and there is every expectation that the same principle will be re-applied in April 2012. Long-listed brands At the NHI revision following a first generic launch. Patients would be required to pay out-of-pocket any amount over the limit if a product that costs more than the reference ceiling is prescribed and dispensed.7% to 24.A preliminary assessment. All off-patent products – originator long listed brands and generics – containing the same amount of the same active ingredient in the same dosage form would be put into groups and deemed interchangeable. While the Ministry of Finance is calling for the additional reduction to be 10%. Reference pricing There have been calls for Japan to adopt one of the commonest cost containment tools used in Europe. suggests the move would result in an increase in the average generic dispensing rate from 22. Reimbursement under NHI would be capped for all products in a group at some preset amount below the group‟s maximum price. In any event. most notably in 1997 when introduction from April 2000 of a Japanese version of reference pricing (known as the “standard benefit amount system”) had been planned. the originator version receives a price cut as a long-listed brand. Originator brands with established generics received an additional NHI price reduction in April 2010 (-2. i.e. It should help more pharmacies achieve the new baseline 22% generic volume dispensing target. Any large reduction of the gap between NHI prices of long-listed brands and generics is unlikely to favor greater use of the latter. For now reference pricing seems off the discussion agenda. encourage the use of less expensive equivalents. Previously. arguing that many bring little additional benefit to patients and are only developed as part of a brand‟s life cycle strategy to block generic entry. offered as “a cry of pain from patients and citizens”. There were clinical concerns about the interchangeability of products within groups. Fixed-dose combinations MHLW‟s proposal to bring combination drugs in line with monodrugs as long-listed products if one of their ingredients has undergone a forced price reduction following the introduction of a generic version has now been accepted. Chuikyo has been highly critical of the growing trend towards new fixed-dose combination products. the government was not prepared to take political risks. The JMA presented a petition. With 2000 an election year in Japan and co-payments a highly sensitive political matter. Introduction was blocked by separate lobbying efforts of the Japan Medical Association and the US pharmaceutical industry. Reference pricing resurfaced for discussion in 2007. the Ministry of Finance has prepared a preliminary estimate showing potential savings of ¥1.MHLW believed this would eliminate the yakka-sa. Nevertheless. Given the importance of long-listed brands to major Japanese companies. Asking patients to pay any reference price excess would require changes to the Health Insurance Law. and foster truly innovative R&D. prospects of these being reimbursed at generic prices are certainly most unlikely. but MHLW said at the time it was “impossible for now to reimbursed generics at the same price as original drugs”. new combination drugs that contain the APIs of these drugs were exempt from special NHI price reductions.760bn ($22bn). 137 . it is interesting that the reason given publicly was a fear of adding to patients‟ cost burden. and the difficulty of assessing actual transaction prices. that prices of cheaper products might rise to the reference ceiling. with almost 6m signatories. improve the transparency of the price-setting process. However. provide equity in terms of terms of patients‟ benefits and burdens. or (ii) by the amount calculated on actual market prices. whichever is lower.From April 2012. A number of big-selling originator brands. At the biennial revision following launch of the first generic version. including Takeda‟s Actos (pioglitazone) and Pfizer‟s Lipitor (atorvastatin). Sonias (pioglitazone + glimepiride). would in addition receive the one-off long-listed brand price penalty (currently -4% to -6%). its price is reduced by the regular biennial cut. a combination product will have its NHI price reduced either i) in proportion to the reduction in NHI prices of monodrugs based on the pricing method used at the time of listing . 138 . The originator product. the originator‟s NHI price would be reduced in a single step by the sum of all premiums received during the protected period in addition to the ordinary biennial price cut. are expected to receive the special reduction for long-listed drugs in the April 2012 NHI price revision. A decision on this should be made by January 2012 based on a review of the development of unapproved drugs/indications. Liovel (pioglitazone + alogliptin) and Caduet (amlodipine + atorvastatin). first generics being listed in November 2011. If the originator brand has not been given a premium at the price revision before generic entry. in either case. If the special reduction is applied to combination versions also. and the R&D industry very much hopes the scheme will be made permanent. Among the first products to be affected will be combinations with pioglitazone (as generics were launched in June 2011) and atorvastatin (as generics were launched in November 2011). industry‟s business performance and the usage of generics. Eisai‟s Aricept (donepezil) is one product that will see its 2010 premium returned in April 2012. Premium for new drug creation The implementation of the premium for new drug creation and resolution of unapproved drugs/indications in April 2010 was on a trial basis. It is likely to continue on a trial basis. affected brands would include Metact (pioglitazone + metformin). They would like to see prices lowered to benefit patients much more by allowing a lower co-insurance. never revolutionary. especially with new generics that are currently priced just 30% below the innovator‟s level.1% (the reduction rate was previously 39. but some individual companies and the JSGM see 60% or even 50% as 139 . pharmacists take their lead from doctors. and some would argue that radical change is needed rather than minor tinkering with existing rules. however. it argues. No generic incentive is currently offered to prescribers. Only when doctors recommend generics will their patients accept them.8% in 2000 and 42. as do patients to an even greater extent. In Japan. This suggests. Other reform measures Clearly more needs to be done if more generics are to be used. changes are always evolutionary. Despite this. Patients prefer to have information given to them by their doctor rather than by the pharmacist. There is some discord amongst the generic industry on this point. MHLW has pointed out that since the introduction of the rule for pricing new generics at 70% of the innovator‟s price in 2004 the average NHI price reduction rate for generics at their first price revision has been 15.If several biennial revisions occur during the protected period. it is thought.6% in 2001). opinion is divided as to where any new incentives should be targeted. Others believe the biggest hindrance to generics arises from their high NHI prices. Even within the generic sector itself. JGA‟s view is that the 70% rule should be retained for new generics. there is still scope to reduce generic introductory prices. the price cut with the originator after generic entry could be as high as 40%. so a generic explanation fee for physicians has been proposed. the generic industry seems unconcerned whether the premium is made permanent or not. Fearful of upsetting prescribers and of litigation should they substitute and a medical problem emerges. Some believe that doctors form the main block to wider generic use. hence the new 60% rule for oral generics when there are many generic versions of the same originator brand. preferable for all generics as either would offer real savings to patients and also promote industry consolidation. only 3. Despite considerable domestic controversy Japan has decided to join the Trans-Pacific Partnership (TPP) and aims to become its 10th signatory nation after Australia.6% (as of August 2011) had 20 or more generic versions. In pharmaceuticals the focus is on strengthening intellectual property. Malaysia. Chile. Singapore.05 million welfare recipients were recorded in July 2011. 140 . Peru. New Zealand. Greater opportunities for generics might also come from the planned reform of the medical care system for the elderly in FY2013. The TPP initiative is seen as a US-led one. Brunei. Japan‟s generic industry is fearful of a subsequent move towards patent linkage – linking marketing approval to the patent status of the originator reference product – which would delay generic entry. it says. The JGA argues against the common belief that a flood of near identical copies follows each patent expiry. It would be impossible to refuse NHI listing for newly-approved generics and NHI purchasing via tender is considered far too radical a change. Generic usage rates are currently lower among this group than among the general population. Some other matters have been in discussion without any apparent resolution on:  whether to increase the frequency of new generic tariff listings from twice-a-year to the same fourtimes-a-year listing that applies to originator brands  what to do about generics that have higher NHI prices than their off-patent originals. A record number of 2. US and Vietnam. All medical treatment costs under welfare are paid out of general tax revenue. Other factors influencing generic prospects The obligatory use of generics for welfare recipients has resurfaced as a discussion item. not NHI. Of all active ingredients which have had a first generic marketed since 2002. blister packaging. Japan will remain an attractive market for generic companies. In general. tablet imprints). special containers to protect health professionals from cytotoxic drugs. Germany or the UK. Whatever cultural problems Japanese firms have faced from this in the past. 141 . Market entry by several of the world‟s leading generic players from overseas will increase the competitive pressure in the sector. who will have also gained good familiarity with Japanese business and distribution practices by then. More Japanese R&D majors will have to accept there is no future in long-listed brands and convert these into generics. the large differences in business practices between research-based and generic firms will act to keep the two parts of the industry apart. and differentiating product/pack features that are seen as user friendly (e. In five years time. and MR numbers are being boosted and distribution improvements are being made to tackle both areas. overseas M&A is looking attractive to cash rich firms with the strong yen. Strongest market growth prospects are seen with inpatient care in DPC hospitals and with dispensing to outpatients by community pharmacies. highly discounting generics to protect the NHI prices of their innovative lines. Sandoz and Hospira.g. Sawai and Towa will be threatened by the long pipelines of the likes of Teva. good customer relationships.Conclusions Generic usage will continue to grow but it is unlikely to reach in the foreseeable future the levels of penetration found in the likes of the US. A few might follow Daiichi Sankyo and enter the local generics business indirectly after acquiring generics companies overseas and benefit from relatively cheap imports back to Japan if these are denominated in yen. especially the multiple groups. though. in particular smaller Japanese generic companies will not be able to compete with the multinationals in terms of cost. One advantage that so-called hybrid firms – those with a mixed portfolio of originator brands and generics – will have over pure play generic firms is an ability to do bundle deals with wholesalers. Other factors contributing to success will include attractive discounts. even the bigger Japanese firms like Nichi-Iko. however. because of the size of its generic opportunity and high prices. this might not turn out to be the case. both to achieve the high quality standards demanded by healthcare professionals and patients alike. as Indian generic companies in particular are keen to prove. Local firms point to the necessity of manufacturing in Japan. and because of Japan-specific dosage forms like fine granules and dry syrups. However. 142 .The single most important key to success in Japan for a generic company new to Japan from overseas would be to align with (and maybe later acquire) a Japanese partner experienced in the sector. Secondary research Secondary sources included the Japan Pharma Times. and regulatory environment. pharma companies and generics companies.Appendix Scope The reports covers Japan‟s healthcare environment. The generics industry is examined in detail along with expected developments shaping the future market. among other industry publications. pricing and reimbursement systems. 143 . Interviewees included senior MHLW staff. the Japan Generics Journal. and executives at trade bodies. Methodology Primary research The author conducted 10 face-to-face interviews with industry experts to gather source material for the report. the Wall St Journal. 45 100. currency conversion was calculated at the deal date. I. a 2011 calendar rate was used.Currency exchanges rates Average annual exchange rates were drawn from OandA. Labor & Welfare MHLW: Ministry of Health. For NHI incentives. Labor & Welfare NHI: National Health Insurance 144 .com BUSINESS INSIGHTS Glossary/Abbreviations Bungyo: (Policy) The separation of the functions of prescribing and dispensing Chuikyo: Central Social Insurance Medical Council DPC: Diagnostic procedure combination JMA: Japan Medical Association Korosho: Ministry of Health.81 85. For deals.71 2011 79.com for calendar and fiscal years 2007–11.5 2009 93. the rate reflects the relevant time period. FY2010 numbers use average FY2010 rate and so on. Table 37: Average exchange rates. The rates used as shown in Table 37.92 2010 87.81 - 2008 103. FY2011 ends 31 March 2012 Source: OandA.65 92. In other cases.72 st st st Note: Japanese fiscal year runs 1 April to 31 March. 2007–11 Calendar year Fiscal year 2007 117.e. & Furukawa. 2009. Antihypertensives: Dividing the largest market between brands and generics. No.jpma. P. 6: 369-389 NIHS 2006 Guideline for Bioequivalence Studies of Generic Products www. 2011 The generic drug market in Japan: Will it finally take off? Health Economics.go. 2009 Iizuka and Kubo.F. 71: 8-13 Japan Pharmaceutical Manufacturers Association (2011) http://www. p31 Wall Street Journal 2011 Daiichi yet to gain from Ranbaxy buy.nihs. 28 September 2008. Eggleston K (ed).jp/drug/be- guide%28e%29/be2006e.jp/drug/be-guide%28e%29/Topical_BE-E. 16th March 2011 145 to Topical Use . Brooking Institution. 2009 The economics of pharmaceutical pricing and physician prescribing in Japan.M. 2009. Policy & Law. Baltimore.pdf Iizuka T. M. physician-driven markets. (2011) Cross-national evidence on generic pharmaceuticals: pharmacy vs.jp/english/parj/pdf/2011.go. The era of 30% generics share starts from these areas.nihs. NBER Working Paper 17226. In Prescribing Cultures and Pharmaceutical Policy in Asia-Pacific. Japan Generics Journal. No.NME: New molecular entity Yakka-sa: Drug price margin gained by hospitals Bibliography/References Danzon.pdf NIHS 2006 Guideline for Bioequivalence Studies of Generic Products www.pdf Nihon Keizei Shinbun.or. 2011. 70: 10-22 Japan Generics Journal.