Japanese pharma sales take hit from 'opaque' pricing system

It will grow at a CAGR of 2.3% to $124b in 2023.

Japan’s pharmaceuticals sales are projected to grow at a five-year compound annual growth rate of 2.3% to $124b (JPY13.81t) in 2023 in what will represent the slowest growth in APAC as changes in drug pricing regulations weigh in on sales, according to Fitch Solutions.

Fitch noted that the pricing system was “complex and not fully transparent.” The system will subject a new drug entering the market to a ‘cost accounting system’ then offset with a ‘corrective premium’ based on features like innovativeness, usefulness, and marketability.

Pharmaceutical Research and Manufacturers of America (PhRMA) chairperson and Bristol-Myers Squibb CEO Giovanni Caforio said that the regulations were overly restrictive, and diminished the country’s attractiveness to foreign direct investment by pharma firms.

Financial support from the government is also likely to fall. Based on the 2019 budget, the general expenditure on social security, which includes health and medicine, grew at an above-average 3%.

Also read: Pricing reforms threaten pharma investment in Japan

Earlier this year, Japan has also implemented its Health Technology Assessment (HTA), where innovative products will be subjected to a cost-effectiveness threshold of $47,000 (JPY5m) per quality-adjusted life year, a move that PhRMA criticises as “arbitrary.”