Japan Aims To Support Innovation But Local Pharma Wants More

While Japan's government is declaring its support for innovation in the life sciences sector, the domestic pharma industry is saying it is being hard hit by other policies encouraging generics and would like to see the implementation of more positive policies.

YOKOHAMA - Addressing the recent BioJapan meeting in Yokohama, Japan's Parliamentary Vice-Minister of Trade and Industry Tsuyoshi Hoshino declared a clear need via official policy to promote innovation.

But while the country's Ministry of International Trade and Industry will certainly play its part to foster innovation and growth, the effort is expected to be a two-way street, and "the biotech industry and academia also need to play an active role," he added.

Given other government health care policies, particularly on generics, that are increasingly eating into its sales, the R&D-based pharma industry in Japan might be forgiven for thinking it is already doing its part to deal with official policies, and is now asking for more support to encourage innovation in such an environment.

Speaking after the vice-minister, Masayo Tada, president of the Japan Pharmaceutical Manufacturers Association, the main group representing the local innovator industry, said that policies to promote generic use in Japan were now having "a major impact" on new drugs.

"In 2004, it took 32 [fiscal] quarters for newly launched generics to gain a 20% volume share. In 2014, this period had dropped to just two quarters."

The government has been steadily rolling out policies over the past few years designed to encourage generic uptake, including revising fees for pharmacists and changing prescription forms, the ultimate aim being to save money for the national health insurance system.

The savings are being used in part to support a system of price cut exemptions for novel drugs through an “innovation premium”. While foreign industry associations in Japan have come out in favor of sustaining this system - which benefits larger companies able to regularly launch innovative drugs while controlling health spending - it seems the JPMA is concerned about the impact on its members.

Smaller Japanese firms with a high ratio of long-listed drugs but limited pipelines are being caught in the middle, with their sales being hit by generics but no novel launches to make up the losses and benefit from the innovation premium.

"A combined 22 JPMA members are facing a JPY180bn [$1.5bn] fall in revenue in fiscal 2014, while R&D spending is rising by [a combined] JPY140bn per annum," Tada told the meeting.

Generics currently account for close to 50% of the substitutable sector by volume and roughly a quarter by value of Japan's prescription drug market, but the government has upped its volume target to at least 80% by the end of March 2021.

"The pace of increase [in generic penetration] is accelerating, and the government is looking to achieve a 70% share in mid-2017," Tada noted.

'Difficult Situation'

Given that even the largest Japanese pharma firms still spend much less in absolute terms that their US counterparts, the industry in the country "is facing a very difficult situation" and more capital is necessary to improve volume of innovation, he cautioned.

So what are some of the answers?

Tada suggested that these could include the encouragement of further research collaborations with academia and open innovation schemes under which pre-competitive basic research results could be shared.

Areas of particular industry interest include academic work on induced pluripotent stem cells and the practical applications of regenerative medicine technologies, he said.

Pointed to the still undeveloped state of Japan's bioventure sector, he said that while size does not necessarily equate to innovation, "we do need an effective framework for more public-private partnerships."

Japan's new Agency for Medical R&D (AMED) was also set up to help bridge the gap, while the JPMA itself has an initiative to nurture discovery alliances in Asia as part of the Asia Pacific Conference of Pharmaceutical Associations initiative (Also see "Asian Industry Groups Progress Initiatives For Faster Approvals" - Scrip, 13 Apr, 2015.).

"We are planning to expand this to China and South Korea following Taiwan," Tada told BioJapan.

AMED's Role

AMED was set up in April to address some of these translational research issues and to act as a coordinating "control tower" to direct and support public and private and inter-ministerial R&D programs in a coordinated way to maximize benefits (Also see "Japan’s AMED Seeks New Mindset" - Scrip, 19 May, 2015.).

A number of joint translational medicine projects involving the industry, government and academia have started running from August under a new AMED guidance. These include initiatives for a chemical library and researching protein-protein interactions, as well as a project on the formation of joint compound libraries for screening, which will be largely outsourced.

Among the other projects AMED has already started is one using genome analysis and a national network of hospitals to help identify rare and undiagnosed diseases (Also see "Japan’s AMED Taps Genomics In Rare Disease Project" - Scrip, 29 Jul, 2015.), as part of which a public tender is being run for proposals.

AMED president Dr. Makoto Suematsu said at the Yokohama meeting that the agency was now also running a matching scheme related to matching clinical disease samples from medical facilities to industry drug research projects, using set protocols and laying out a well-defined process for sharing.

The first results from scheme are expected by the end of this month, and the plan is to expand it from the Kanto (Tokyo) area initially to nationwide over the next three to four years.

Other projects in the works include one for degenerative muscular disorders and related biomarkers, for which AMED is now soliciting pharma partners.

Overall, it was clear that one of the major goals is to help smaller companies with limited R&D budgets find and progress new projects, going some way to addressing the JPMA’s concerns. Realistically, however, the benefits could take several years to flow through.

Pre-Orphan, Consultation Schemes

On the regulatory side, Suematsu revealed that AMED is planning a "pre-orphan designation" support program for bioventures which would award grants for basic research or the repurposing of existing drugs to support the development of smaller orphan indications that otherwise may not be viable for such companies.

The new agency is also partnering with Japan's drug and device regulator, the PMDA, on pre-consultations, to determine if a formal consultation with the PMDA - used to clarify precise regulatory and clinical trial requirements - is actually required.

"The PMDA is overworked, so AMED is aiming to set up a one-stop service to clarify with applications if there is really a need for a PMDA consultation. The hope is that the system will help reduce the PMDA's workload," Suematsu explained.