A good article in today's WSJ on the Japanese drug market:
Western Drug Firms Profit
As Japan Opens Its Market
Foreign Firms Dispense With Traditions,
Find Increasing Demand for New Remedies
By PETER LANDERS
Staff Reporter of THE WALL STREET JOURNAL
TOKYO -- Chizuko Okuguchi was diagnosed with lung cancer in the spring of 2001. But by this fall her chemotherapy treatments were no longer able to keep the disease in check.
Now, the 38-year-old mother of two is taking a controversial new pill from Britain's AstraZeneca PLC that is being marketed in Japan before anywhere else in the world. Ms. Okuguchi says her cancer has regressed since she began taking the drug, Iressa, and she feels almost back to normal. "I feel like I'm taking part in rewriting the history of cancer" treatment, she says.
Ms. Okuguchi's story highlights the dramatic transformation that has taken place in Japan's long-protected drug market. For decades Japan's government blocked or delayed many Western drugs, partly to help local drug makers and partly out of cultural prejudice. Until 1998, Japanese rules required that drug trials be redone in the country from scratch on the theory that the Japanese body was different from that of a Westerner. As most of the industrialized world benefited from an explosion of new drugs in the 1980s and 1990s, Japanese patients lacked access to some of the West's best-known medications -- Claritin, Prozac, Tylenol, even the birth-control pill.
Opening Doors
Change came in the late 1990s, when Japan began opening several of its industries to foreign competition, including finance and cars. The aim was to attract foreign capital that would help bail out troubled domestic companies and inject a spark of vitality into Japan's sagging economy. Officials saw the huge growth of the global drug market and wanted Japan's companies to learn to compete with their best foreign rivals. "You can't develop industries by protecting them," says Hitoshi Kanuma, a deputy director in the health ministry's policy section.
MORE FOREIGN DRUGS
Japan's government is approving more drugs of foreign origin.
Percentage of imports among new chemical entities approved:
1990: 51%
1991: 42%
1992: 41%
1993: 45%
1994: 44%
1995: 54%
1996: 67%
1997: 67%
1998: 64%
1999: 70%
2000: 74%
Source: Japan Pharmaceutical Manufacturers Association
KEY PLAYER
Japan is the third-largest pharmaceutical market in the world, or second-largest if the European countries are counted separately.
Percentage of global pharmaceutical sales:
North America: 50%
Europe: 24%
Japan: 13%
Asia, Africa, Australia: 8%
Latin America: 5%
Source: IMS World Review
LOCAL DRUGS
Until recently, many Japanese companies focused on their home market, with drugs that critics said were too ineffective to get approved overseas. The numbers below show the percentage of drugs in each country that are approved only in that country:
Japan: 35.6%
U.S.: 12%
Germany: 5.6%
Source: Japan Pharmaceutical Manufacturers Association
Now Western drug companies find it quicker and easier to get their products approved in Japan. American-style drug advertising is commonplace. (Viagra-maker Pfizer Inc., for example, has run frequent newspaper ads about erectile dysfunction, featuring soccer legend Pele.) Patients are demanding more drug information from their doctors and are lobbying the government to speed up approval of pharmaceuticals from abroad.
"Doctors are increasingly using the drugs that are accepted world-wide," says Yukio Suzuki, marketing chief in Japan for Pharmacia Corp. "Nowadays the global bestsellers also sell in Japan."
Rare Opportunity
As the third-largest drug market in the world, Japan represents a rare growth opportunity for Western companies, which face slowdowns at home. In the U.S. and Europe, the No. 1 and No. 2 drug markets, companies are under pressure because of patent expirations on key drugs and a shortage of new blockbusters in the pipeline. Political pressure in the U.S. over high drug prices also is a threat.
Japanese drug prices are controlled by a European-style, national health-care system that limits profits. But foreign companies see opportunities to grow by displacing domestic producers. Drug companies also see Japan, whose educational system places strong emphasis on science and technology, as a promising place to conduct research.
Overall, foreign firms have increased to 26% their share of Japan's $50 billion in annual drug sales, up from 17% in 1990. The planned merger of Pfizer and Pharmacia will make an American company Japan's second-largest prescription-drug seller. The company will have combined sales of nearly $3 billion, placing it behind top player Takeda Chemical Industries Ltd., which had drug sales in Japan last year of $3.6 billion.
Tokyo officials took a big step in 1998 when they agreed after six years of talks to allow companies to use data from clinical trials abroad in applying for approval of drugs in Japan. The new rules required small-scale drug studies on Japanese subjects, but still sharply lowered the bar of entry for foreign firms.
The foreign companies are bringing with them Western ways of selling medicine. Pfizer and Pharmacia, for example, together are flooding hospitals and doctors' offices with more than 3,000 salespeople, more than double the level at Japanese industry leader Takeda.
"They're a huge threat," says Tadashi Hirata, president of Kyowa Hakko Kogyo Co., who is boosting his 800-strong sales force by 100. "It's like a human wave."
Larger Shift
The direct-sales approach is part of a larger shift in the way drugs get from manufacturers into the medicine cabinets of Japanese patients. Traditionally, doctors bought drugs from companies through middlemen, and then sold directly to patients. The system ensured that doctors made a hefty profit, and patients usually ended up with too many drugs.
HEALTH INDUSTRY EDITION
See a chart1 of drugs awaiting FDA approval that have already been approved overseas.
* * *
To rein in costs, the government in recent years began cutting back reimbursements to doctors on the most-lucrative drugs. The result: Much of the prescription-drug business has moved out of doctors' offices and into Western-style pharmacies. Today, about half of all prescription drugs are purchased at independent pharmacies.
Advertising also has been liberalized, playing to foreign companies' experience. In 2000 the government permitted ads to solicit patients for clinical trials. Companies can also use the media to promote disease awareness. But unlike in the U.S., advertising of specific drugs in Japan isn't permitted.
Pharmacia soon after began using ads to solicit patients to participate in Japanese trials of an incontinence drug. Using Western-style star attraction, the company recruited well-known comedian Kobuhei Hayashiya and his family to appear in full-page newspaper ads that tried to reduce the stigma of the embarrassing ailment. The ads also could help to build a market for the drug when it finally gains regulatory approval.
Mr. Suzuki, the Pharmacia marketing chief, says hundreds of patients responded. The big turnout reduced the length of the clinical trials to nine months from the usual three years. The company expects to receive regulatory approval and start selling the incontinence drug in Japan next year. (Pharmacia already markets the drug in the U.S. under the name Detrol. But it says its original U.S. trial was conducted too long ago for those results to be used in seeking Japanese approval.)
A handful of foreign companies have used acquisitions to expand in Japan. Switzerland's Roche Holding AG, for example, bought a majority stake earlier this year in Chugai Pharmaceutical Co., which is noted for its biotech research. But most foreign firms are expanding by hiring new employees and training them in-house. Pfizer has hired 600 new salespeople in Japan in the last year alone.
The onslaught of foreign competition has forced Japanese companies to respond. Many are boosting research-and-development spending to update their product pipelines. Takeda, for example, plans to increase R&D by 20% in the current fiscal year to about $980 million.
Japanese drug makers also are working to expand their global operations. Yamanouchi Pharmaceutical Co., one of Japan's biggest, has set up a new subsidiary in New Jersey and is hiring hundreds of salespeople in preparation for the expected 2004 launch of an incontinence drug. Taken together, Japan's top eight drug companies generate about a third of their sales overseas, which is up from 20% five years ago.
The opening of Japan's drug market has brought changes for Japanese patients. For years, as Pharmacia's Mr. Suzuki says, "the doctor was king." One example: Until 1994, it was a legal and widespread practice for doctors to give experimental drugs to patients without asking permission or even telling the patient that he was participating in a clinical trial. After the Western concept of what Japanese call infomudo consento (informed consent) crept in, the health ministry changed the rules to require patient permission.
Patients rarely questioned the armload of pills they bought from their doctors. The government covers most drug costs in Japan, so it didn't cost much. And doctors put a high priority on safety, knowing drugs with heavy side effects would ruin the trust they enjoyed with patients.
The result was that domestic drug makers cranked out safe but ineffective drugs. Before Japan's economy faltered in the 1990s, the government was willing to approve the drugs to prop up the companies and to pay for them under the state-run health-insurance system.
A widely chronicled example was Krestin, a mushroom extract sold by Sankyo Pharmaceutical Co. that was Japan's biggest-selling cancer drug for much of the 1980s. Sankyo has described Krestin as an herbal drug that enhances the immune system's ability to fight off cancer. Critics said Sankyo lacked evidence to show Krestin worked. The company never sought approval for the drug in the U.S. In 1989, Japan's health ministry severely restricted Krestin's use, although it still can be used in combination with other drugs.
"For many years in cancer therapy it was more important to have no side effects than to have an effect," says Roche Chief Executive Franz Humer.
As Japan's economy worsened, the government has grown increasingly reluctant to approve marginal drugs. Also, as global companies developed new classes of highly effective drugs, such as the statins to lower cholesterol levels, the gap with Japan's minimally useful medicines grew too wide to ignore.
Demanding Access
Patients have picked up on these advances and increasingly are demanding that they get quick access to drugs. In 1998, for example, many Japanese began ordering Viagra over the Internet. Pfizer, the maker of the impotence pill, took advantage of Japan's new rules and sought marketing approval using U.S. data. The government approved it with unprecedented speed, in just six months.
Mari Goto, an ophthalmologist in Tokyo, says patients today also insist on evidence that their treatment is working. She often prescribes Xalatan, a glaucoma medication made by Pharmacia, because it produces a clear reduction in the fluid pressure on the eyes. "Things have changed," she says. "Patients study a lot, so we have to study a lot."
Japanese cancer patients recently have become a political force, meeting frequently with government leaders to push for quick approval of overseas drugs. One of their biggest successes came last June, when the government approved Iressa, the AstraZeneca cancer drug, just 5½ months after AstraZeneca submitted its application. Japanese doctors have prescribed it for more than 10,000 patients, including Ms. Okuguchi, the mother of two.
The quick approval of Iressa underscores the Japanese government's change of emphasis from backing only drugs that are safe. The cancer drug can be dangerous: It's already suspected of being linked to the deaths of 39 Japanese patients who caught pneumonia. But for some people with little other hope, it can be a miracle. (AstraZeneca says it's working to reduce the potential danger by stepping up guidance to doctors not to administer Iressa to patients with severe respiratory problems.) The U.S. Food and Drug Administration is still weighing whether to approve Iressa. The drug is available to some American patients under a "compassionate use" program.
"For many years people said, 'The Japanese treat diseases differently.' But that isn't true any more," says Mr. Humer, the Roche CEO. "They're much more closely aligned with Western medicine than they were 30 or 40 years ago."
Write to Peter Landers at peter.landers@wsj.com4
URL for this article:
online.wsj.com
Peter |
