Overview
Unit: USD thousands

Total market size = total local production + imports – exports
Data Sources:
               Total Local Production: GOJ Ministry of Health, Labour and Welfare (MHLW)
               Total Exports:  MHLW
               Total Imports:  MHLW
               Local production and export figures for 2018 are based on MHLW’s monthly report.
               Import figures from U.S. for 2018 are unofficial CS Japan estimates.
               Figures for 2019 are unofficial CS Japan estimates.

Japan continues to be one of the largest pharmaceutical markets in the world despite the more challenging business landscape due to demographics. According to the latest official figures from the Ministry of Health, Labour and Welfare (MHLW)’s Annual Pharmaceutical Production Statistics, the Japanese market for prescription and nonprescription pharmaceuticals in 2018 totaled $87 billion (down 4.4 percent from 2017 in yen terms). More than 90 percent of the total market consists of prescription pharmaceuticals. Imports of foreign pharmaceuticals accounted for approximately 30 percent of the total Japanese market in 2018. The total market share of U.S. and other foreign origin pharmaceuticals, i.e., including local production by foreign firms and foreign-owned compounds licensed to Japanese manufacturers is estimated to be much higher. According to IQVIA, the world’s largest contract research organizations, foreign companies, including U.S. companies, increased their market share to over 60 percent based on sales among the top 20 makers in Japan in 2017. The market, especially for prescription pharmaceuticals, is projected to see a negative growth in coming years due to continued challenging pricing environment to contain healthcare expenditure. IQVIA projected that Japan’s overall growth will be the slowest among the developed markets with a negative compound annual growth rate (CAGR) between -3% and 0% in 2019-2024, while the worldwide growth is projected with a positive CAGR between 3% and 6% during the same period. However, despite the challenging pricing environment, the market is expected to remain one of the most important destinations for U.S. and foreign innovative biopharmaceutical companies due to continued demands for drugs from Japan’s aging population.

Healthcare Policy
Japan's healthcare system receives high marks for providing both basic care and a free choice of doctors to all citizens, at an affordable cost, under the National Health Insurance (NHI) system established in 1961. The OECD described the health status of the Japanese people as one of the best in the world. Japan enjoys both the world’s highest life expectancy rate along with the lowest rate of infant mortality. The country spends about ten percent of its GDP on healthcare, which is relatively low compared to other industrialized nations. However, Japan’s aging population, combined with a diminishing number of children has led to serious financial difficulties for Japan’s medical system. Under these circumstances, the Japanese government has been taking various measures to cut healthcare spending, including cutting reimbursement prices for pharmaceuticals through the reimbursement price revision. Companies have expressed serious concerns that pharmaceutical pricing faces downward pressure for innovative products for several reasons: (1) a reduction in the scope of innovative pharmaceuticals covered by Price Maintenance Premium (PMP), a system implemented in 2010 which provided a predictable and stable pricing environment for innovative drugs thru the life of the patent; (2) a proposal to expand application of the cost-effectiveness assessment (CEA) system, and (3) a proposed shift from the biennial reimbursement price revision to the annual revision.

Leading Sub-Sectors
Biotechnology
Over the last thirty years, the estimated size of the Japanese biotech-based economy grew rapidly from $224.7 million in 1986 (at the exchange rate of 110.40 yen to the dollar) to $3.2 billion in 1991 and to $32.0 billion in 2017. In 2018, it further grew by 3.7% to $33.2 billion, according to the Nikkei Biotechnology & Business, a leading industry publication.  Within the bio-tech economy, the healthcare/pharmaceutical industry segment is the largest sector with $2.1 billion (or a proportionate weight of 63.3% of the total). Within that sector, therapeutic antibody drugs and biological drugs have been the two largest drivers for growth and this trend is expected to continue for the coming few years. Also, increased business opportunities around regenerative medicine and nucleic acid drugs have begun to emerge in 2017, following the enactment of two regenerative medicine related laws in late 2014. To further support Japan’s biotech economy, the Ministry of Economy, Trade and Industry (METI) has been implementing programs to bolster Japanese medical ventures starting 2017. In 2018, the Ministry of Environment established basic strategy on dealing with plastic recyclable waste, particularly in light of the growing concerns with the oceanic contamination with plastic waste, which is expected to boost demands for bioplastic in the long run. Biotech-based economy/industry is an integral part of the Abe Administration’s growth strategy as captured in the “Growth Strategy 2017 – Society 5.0”.

Opportunities
INTERPHEX Week JAPAN (https://www.interphex.jp/en-gb.html)
July 3 -5, 2019
Tokyo Big Sight

Bio Japan 2019 (http://www.ics-expo.jp/biojapan/en/index.html)
October 9 – 11, 2019
Pacifico Yokohama

Medical Japan 2020 (https://www.medical-jpn.jp/en-gb.html)
February 26 - 28, 2020
Intex Osaka

CPhI Japan (http://www.cphi.com/japan/home/)
March 16 - 18, 2020
Tokyo Big Sight

Web Resources
Ministry of Health, Labor and Welfare (MHLW)
Pharmaceutical and Medical Device Agency (PMDA)
Pharmaceutical Research and Manufacturers of America
The Japan Pharmaceutical Manufacturers Association
The Federation of Japan Pharmaceutical Wholesalers Association (JPWA)
Pharmaceutical and Medical Device Regulatory Science Society of Japan (PMRJ)
The Pharmaceutical Society of Japan (PSJ)
Japan Generic Medicines Association (JGA)
Japan Bioindustry Association (JBA)

CS Japan Contact:
Pharmaceutical and Medical Device
Mr. Hiroyuki Hanawa, Senior Commercial Specialist
Hiroyuki.Hanawa@trade.gov
Biotechnology and Regenerative Medicine
Mr. Chris Y. Ono, Senior Commercial Specialist
Chris.Ono@trade.gov