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Biotech boom for Japan?

Biotech Japan Posted on: 15 Aug 03


Some of the world’s leading drugs, such as Bristol-Myers Squibb’s pravastatin for high cholesterol, TAP’s lansoprazole and Daiichi’s levofloxacin were discovered in Japanese laboratories. With this history of important drug research there is keen interest in biotechnology.
Japanese biopharmaceutical companies have played an important part in new drug innovation. Some of the world’s leading drugs, such as Bristol-Myers Squibb’s pravastatin for high cholesterol, TAP’s lansoprazole and Daiichi’s levofloxacin were discovered in Japanese laboratories (1). With this history of important drug research there is keen interest in biotechnology.

The Japanese market is becoming more accessible, offering new opportunities for small-stage biotech companies that have exhausted partnering prospects and had difficulty receiving funds from U.S. investors.  Under Japan's socialized health-care system, reimbursement rates for prescription drugs can be as much as 10 times higher than reimbursement rates in other parts of the world.  However, Japan also has one of the highest prescription drug consumption rates in the world, and a solid trial run in Asia can improve prospects for the modest number of biotech companies that will ultimately survive.

Today, Japan has an established pharmaceutical market, comprising roughly 12 percent of the global pharmaceutical industry (2).  Now battling a flagging economy, Japan is looking to gain notice in the biotech field and is seeking out US companies to help it gain a larger share of a limelight that has shone mostly over the United States and Europe.  In addition, an improvement in the international regulatory climate should make it easier for US companies to obtain drug approval. The International Conference on Harmonisation of Technical Requirements for the Registration of Pharmaceuticals for Human Use (ICH) has been a strong driver in this regard (3). ICH aims to eliminate redundant studies and promote global clinical development with the anticipated impact of further reducing development times and costs. ICH is a unique project that brings together the regulatory authorities of Europe, Japan and the United States and experts from the pharmaceutical industry in the three regions to discuss scientific and technical aspects of product registration (3)

With the assistance of the Japan External Trade Organisation (JETRO), which matches US companies with their Japanese counterparts, many US biotech firms are in talks with companies in Japan about possible alliances with the purpose of entering the Asian market.  Established in the 1950s as a government-funded nonprofit, JETRO's original mission was to promote Japanese exports overseas to aid in the development of Japan's post-war economy.  Having met that goal, JETRO, with seven US offices and 80 overseas offices, changed its mission completely and is now trying to promote imports into Japan.  To accomplish the new goal, JETRO sponsors study programs for US companies, carrying them overseas at no expense and lining up the kind of pressed-suit meetings small biotech businesses have difficulty obtaining.

According to Ernst & Young, the Japanese biotech sector should experience strong growth in the next few years, partly because of continuing support from the government (4). For example, the government selected genetic research as one of the key areas in its eight Millennium Projects. These are joint industry-academia-government projects and have around US$1 billion in funding allocation (4). Despite this focus, the biotech industry has some way to go. Current estimates suggest that the number of biotech companies in the USA is 25 times that of Japan (4).

Funding for small companies should also improve through initiatives such as the Japan Bio-Venture Development Association’s (JBDA) collaboration with Global Tech Investment (5). This initiative aims to connect technology-based researcher in universities with interested parties in the business community. With a team of ten professors, the JBDA is in charge of identifying potential technologies in the university environment whilst the GTI concentrates on developing funding through its business specialists (5)

Another interesting development is a recent change in the law that allows faculty members at national universities to serve simultaneously as corporate executives in start-ups (6). This will be a major boost to the concept of the start-up company and should lead to an increased focus on biotechnology in Japanese new drug development.


  1. Pilling D (2001). Pharmaceuticals 2001/Japanese Focus. Financial Times.
  2. 2002 World pharma sales growth: slower, but still healthy. IMS Health.
  3. The Value and benefits of ICH to Industry (2000).
  4. Beyond Borders. The Global Biotechnology Report 2002. Ernst & Young.
  5. Murai F. (2003). Global Outsourcing Review. Vol 5 (2): 95-96.
  6. Japan Biotechnology Industry. Biotech Japan.

Dr Faiz Kermani

Last updated on: 27/08/2010 11:40:18

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