And here's a FT article on the Japanese response to price issues:
Japan introduces new drug-pricing regime
By David Pilling and Michiyo Nakamoto in Tokyo
Published: March 31 2002 17:55 | Last Updated: March 31 2002 19:02
Japan will from Monday introduce a drug-pricing regime that will put further pressure on the country's plethora of second-tier pharmaceutical companies, while encouraging its more competitive groups to step up foreign sales and investment in research.
Price cuts will average 6.3 per cent, but will be skewed towards older medicines in what amounts to Japan's first tentative steps to develop a market in generics - cheap copies of off-patent pharmaceuticals.
The latest cuts, part of the government's attempt to clamp down on healthcare costs in a rapidly ageing society, follow more than a decade of regular price reductions that have seen Japan's drugs market shrink from 22 per cent of world sales to about 12 per cent. Japan is still the world's second-largest pharmaceuticals market with some $50bn in annual sales.
Unlike in previous price-cutting rounds, the government will slice the price of older medicines by nearly 5 per cent more than those of newer drugs. Medicines deemed by regulators to be innovative - rather than "me-too" versions of existing products - will command premiums of between 40 and 100 per cent.
The government's clampdown on prices of older medicines signals a shift towards prioritising budgetary concerns over its previous policy of trying to foster a strong domestic pharmaceutical base - a strategy that has been only partly successful. Japan boasts only one world-class drugs company, Takeda.
Many Japanese companies that have prospered in the domestic market for years without producing any new medicines are likely to see their profits eroded as prices of old drugs are cut.
"I don't think that future expansion [of the pharma market] in Japan will be big even five years from now," said Hatsuo Aoko, president of Fujisawa, one of a handful of Japanese drug groups that makes a substantial proportion of its profits abroad. "That is why many Japanese companies are planning to expand their production outside Japan."
Foreign companies with ageing drug portfolios will also be affected by the price cuts. Some European groups, such as Bayer of Germany, have done relatively well in Japan through long-standing relationships with doctors and distributors. But those without new products will struggle to maintain profits.
For foreign companies with a portfolio of new drugs, however, Japan is becoming an more simple environment in which to operate.
Regulatory changes and a greater willingness by Japanese graduates to work for foreign groups have seen several companies, such as AstraZeneca of the UK and Pharmacia of the US, increase sales rapidly in Japan.
Peter |
