​IQVIA Japan 2020 Pharma Market Insights: Outlook to 2024

On April 16, the Healthcare Committee and Digital Health, Medical Devices and Diagnostics, Pharmaceuticals, and Regenerative Medicine and Bioscience Subcommittees hosted Alan Thomas, Director of Thought Leadership at IQVIA Japan K.K. to discuss the structural shifts in R&D pharma companies and Japan’s role in challenging the status quo.
 
Japan is the third-largest pharmaceutical market globally, with the second-largest market for branded pharmaceuticals, innovation and launches in new active substances, and specialty. Japan remains the third-largest market for biologics.   

Five key trends that reflect where we are today and will continue through 2024:

• More focused portfolios (instead of broad, predominantly chronic, disease area portfolios) 

• Specific focus on biologics and specialty (shifting away from small molecule and primary care)

• Increasing investment in new active substances (versus reliance on long-listed products)

• Fulfilling unmet needs through real innovation

• Shifting to go-to-market strategies and digital promotion

Company trends in Japan:

• Companies investing in innovative launches and supporting their protected portfolios see strong growth opportunities.

• Overall, healthcare cost savings resulting from a shift to cheaper generics and lower prices on long-listed products are funding innovation today.

• The performance of leading companies is heavily influenced by portfolio structure and investment in innovation.

  • Performing below market average: investments in long-listed products, with relatively low investment in premium brands, and low contribution from innovation

  • Performing above market average: fewer investments in long-listed products and devote more to premium brands, strong investment in innovation with about 60% of their portfolio dedicated to specialty products  

Global trends in the last five years:

• Investment and launch in specialty collectively contributed all positive growth, expanding the share to 35% of total drug spending

• Biologics comprised 22.9% of total spending on strong innovation 

The extent of the impact of COVID-19 on pharmaceutical spending will be influenced by:

• The increase in the number of cases via community transmission

• The timing of the peak in the number of cases

• The end of the outbreak

The outlook to 2024 update assumes a peak in the latter half of April-June 2020 and an end to the outbreak in October-December 2020 or no later than January-March 2021.  Unlikely that quarterly spending will return to baseline until after March 2021.  The overall impact on a fiscal year basis is projected at 300 billion yen.

• Key consideration is whether or not there will be a recurrence, and if there is, whether it is seasonal.

• There will be a rebound in growth; however, the overall size of the market will be smaller than the original baseline forecast.

• Investment in new launches may fluctuate as the healthcare sector diverts resources to COVID-19, but new launches may include the development or utilization of existing therapies for coronavirus treatment.

The decline in overall patient visits and consultations unrelated to COVID-19 will also affect pharmaceutical spending during FY20.

• Patients with non-emergency or minor conditions are refraining from hospital visits for fear of community infection.

• A third-party study found that patient load has decreased and will continue to remain low during the pandemic across countries and specialties.

• Expected therapy areas impacted the least are antiviral agents, respiratory agents, CNS, and therapies for severe, more life-threatening diseases including oncologic, auto-immune, and specialty diseases.

Opportunity in remote channels:

• Considerable increase in remote channel share of total promotional volume since early February.

• An ongoing survey shows doctors desire relevant medical information through remote detailing channels.

• The technology may not be robust enough to support the emerging needs of the medical industry.  Pharma companies should maximize this time to establish and strengthen remote detailing technologies, as medical practices adapt to a world beset with COVID-19.​ 

Questions & Answers
Why would the tax hike impact the number of patient visits?

• In mild or moderate cases where there are OTC or other alternatives, individuals opted out of consultations and treatments due to the perception of increased costs.

Will online diagnoses and treatments increase in the aftermath of COVID-19?

• Quite likely.  Currently, Japan does not have robust telemedicine policies or infrastructure in place, but efforts investigating their establishment and increased use are underway.

In your estimates, what assumptions were used for the annual repricing expected next year? 

• The potential for out-of-cycle price cuts for big seller products and annual price cuts in the unprotected market.

Will GOJ promote more R&D incentives and support innovation or slash costs as the economy faces a recession?

• There will be increased pressure on pricing as the government supports the country as a whole.  However, additional incentives are likely, especially for therapies related to COVID-19, and the government is looking at implementing the necessary systems and processes to review consultations in a timely fashion.