Matej Mikulic
Research expert covering health, pharma & medtech
Pharmaceutical industry in Japan - statistics & facts
The pharmaceutical industry in Japan has continued to be one of the world's largest, with an approximately four percent share of the global pharmaceutical market. However, the Japanese pharmaceutical industry has experienced minimal growth in the past years. Complex regulatory and pricing processes, as well as regular price cuts, have made it difficult for pharmaceutical companies to introduce new innovative products. Additionally, the profit margins of pharmaceutical companies have been influenced by the promotion of generic drugs, which were adopted by the government in 2007 to reduce healthcare expenditure in Japan. The volume share of generics in the Japanese market has more than doubled during the last decade and has continued to rise.
At the same time, the Japanese government has been working on reducing long approval processes for new products faced by pharmaceutical companies, which may have the positive effect of attracting foreign companies. The government hopes these actions will increase international investment in the Japanese market and support pharmaceutical exports from Japan, which have been rising significantly.
Some major pharmaceutical and research institutions in Japan are already implementing artificial intelligence (AI) into various stages of healthcare such as drug discovery and diagnostics. In addition, the Japanese government is promoting the integration of AI in the healthcare sector and there are plans to establish AI-based hospitals in the coming years in the hopes of dealing with the rapidly aging population, medical personnel shortages, and rising healthcare costs. However, the adoption of AI faces challenges such as data privacy concerns as well as a shortage of AI-trained professionals in healthcare, which limits the pace of innovation.
As the growth of the Japanese pharmaceutical industry slows down, the government will likely continue supporting the industry by reducing long approval processes for new products, pushing pharmaceutical exports, promoting digitalization as well as the implementation of AI in the healthcare sector.
Transformation of the domestic market
As many drug patents have begun to expire and the market for generic drugs has flourishes, Japanese companies have been forced to adapt to a changing market environment. On the other hand, aging demographics and the growing life expectancy of Japanese society bear various opportunities for the medical and pharmaceutical industries due to an increasing demand for medical treatments and pharmaceutical products.At the same time, the Japanese government has been working on reducing long approval processes for new products faced by pharmaceutical companies, which may have the positive effect of attracting foreign companies. The government hopes these actions will increase international investment in the Japanese market and support pharmaceutical exports from Japan, which have been rising significantly.
Digitalization in demand
The pharmaceutical industry in Japan, like many other industries, is experiencing a digitalization movement. The general hope is that digital technology will significantly increase the efficiency and efficacy of the outputs, especially in the country’s drug discovery research segment, to overcome the sluggish growth of the market.Some major pharmaceutical and research institutions in Japan are already implementing artificial intelligence (AI) into various stages of healthcare such as drug discovery and diagnostics. In addition, the Japanese government is promoting the integration of AI in the healthcare sector and there are plans to establish AI-based hospitals in the coming years in the hopes of dealing with the rapidly aging population, medical personnel shortages, and rising healthcare costs. However, the adoption of AI faces challenges such as data privacy concerns as well as a shortage of AI-trained professionals in healthcare, which limits the pace of innovation.
As the growth of the Japanese pharmaceutical industry slows down, the government will likely continue supporting the industry by reducing long approval processes for new products, pushing pharmaceutical exports, promoting digitalization as well as the implementation of AI in the healthcare sector.
