The wait for the Indian generic drug-makers looking to enhance their presence in Japan may get longer as the Japanese government’s target to raise consumption of these drugs among its population to 30 per cent this year is unlikely to be met.
This adds to the slow pace of growth in generics business in the world’s second largest pharmaceutical market, which is expected to reach a size of $130 billion in the current year.
According to a Pharmaceutical Export Promotion Council (Pharmexcil) report, the recent share of generic products in the Japanese market stood at 9.1 per cent by value and 20.5 per cent by volume.
Pharma exports to Japan, mostly bulk drugs, grew 88 per cent last year, but the total value of these exports stood at $150 million. Of this, the industry estimates the share of formulations at just over $19 million after achieving a growth of around 34 per cent compared with $14.6 million in 2010-11.
“Though the government has set a target of 30 per cent by volume for generic drugs, it is rather difficult to achieve this year owing to several factors, including the continued reluctance on part of doctors and patients,” said Yoshitsugu ITOH, editor of Tokyo-based International Pharmaceutical Intelligence, a pharma sector publication. According to him, the current usage of generic drugs in his country is about 23 per cent (by volume) as compared with 17 per cent in 2010.
But, there is a brighter side to all these, according to him. Japanese companies are increasingly looking for collaborations in markets outside Japan partly because their profits in the domestic market are fast dwindling. This may help Indian companies tap the Japanese market by forging alliances with them.
“At present, they are only confined to importing of APIs (active pharmaceutical ingredients). Once they get to know about the excellent technology and capabilities of the Indian pharmaceutical companies, they will look for collaborations in multiple areas, including drug discovery research and contract manufacturing,” Yoshitsugu, who recently visited the facilities of Hyderabad-based pharma companies told Business Standard.
Moreover, growing healthcare bill in Japan is putting pressure on the government exchequer, giving scope to usage of cheaper generic medicines, he said.
Innovator drugs
Use of just about 100 generic equivalents of the innovator drugs in Japan would help reduce the health budget by 1,700 billion yen (over $21 billion), according to him. The difference in cost of generics to innovator brand in Japan is about 30 per cent unlike in the US where it ranges between 0 and 5 per cent post exclusivity period.
However, drug laws in Japan are proving to be tough for the entry of generic drug makers not only from India but also from the developed world, according to Srinivas Lanka, adviser to Pharmexcil. This is the reason why even a leading global generic player like Teva could enter Japan only 2 years ago, he said.
“For instance a generics maker in Japan has to prove bioequivalence of every strength of a drug, which involves added costs, whereas the US FDA or other regulators accept dosage linearity after proving the equivalence for one strength - say 5 mg,” said Lanka, who had previously worked in higher management levels at Sun Pharma and Aurobindo.
Besides the general notion that innovator brands are superior than generics, the market there is doctor-centric entailing high marketing costs for generic makers. It also taking more time to inspect facilities that intend to export APIs and formulations as the Japanese health regulator, PDMA, has limited staff, he said.
As of March, 2012, of the site inspected by PDMA, 20 per cent (190 sites) was in India. However, only about 25 were into production of finished dosage forms while the rest were API facilities. This shows the API manufacturers have better opportunities to directly export bulk drugs to Japanese pharmaceutical companies than the formulations makers this year, especially when more than half a dozen APIs are going off patent this year in Japan.
According to a recent Barclay's report on the global pharma sector, Lupin and Cadila have a meaningful presence in the Japanese generics market. Lupin's acquisition of a Japanese company and Ranbaxy's cross border deal involving its takeover by Japan's Daiichi Sankyo had paved the way for firm establishment of their presence in recent times. Also, Dr Reddy's Laboratories Limited had formed a joint venture with Fujifilm this year to jointly produce and market generic drug products in Japan.
A recent relaxation in laws pertaining to clinical trials and bioequivalence studies by the Japanese government wherein the approval for a drug would be given even if these studies are conducted on Asian populations in place of Japanese-only condition, may make it easier for the Indian generic drug makers to export their products in the near future, the Pharmexcil officials said.
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