Policy Research Institute page Characteristics of the top products in terms of overseas sales of major Japanese pharmaceutical companies

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In addition to the aging of the population, medical advances, and the introduction of new technologies, national healthcare expenditures in Japan are rising steadily, while the growth of the Japanese pharmaceutical market is being restrained by drastic reforms to the drug price system and other factors. On the other hand, looking at the global market, global sales of prescription drugs have increased at a compound annual growth rate of 4.0% over the past nine years. In this environment surrounding Japan, Japan-based pharmaceutical companies have been expanding their markets from Japan to overseas as one of their growth strategies to broaden sales channels for their pharmaceutical products. In order to identify the drugs that have contributed to the growth of overseas sales of major Japanese pharmaceutical companies, we surveyed the target diseases, technologies (modalities), development regions, development and marketing methods, and origins of creation for the overseas products of the top nine companies in terms of overseas sales.

1. Introduction

In addition to the aging of the population, medical advances and the introduction of new technologies have led to a steady increase in national healthcare expenditures in Japan*1. Under these circumstances, the ratio of drug expenditures to national healthcare expenditures has been maintained at around 20% over the past 20 years, and drug expenditures have remained above 10 trillion yen per year*2. *2. It is difficult to predict that the Japanese pharmaceutical market will expand dramatically in the future due to the NHI price review of long-term listed drugs and generics under the fundamental reform of the NHI drug price system in FY2018, the implementation of annual NHI price revisions starting in FY2021, and the trend toward further promotion of generic drugs.

Figure 1 shows global ethical drug sales trends for 13 countries and regions based on IQVIA World Review Analyst 2010-2019. Global prescription drug sales increased at a compound annual growth rate of 4.0% over the nine-year period from 2010 to 2019. Within each country, the United Kingdom showed an increase of 4.2%, on par with the CAGR of global total sales, while Germany, Italy, and Spain showed a lower CAGR, and Japan and France showed a CAGR of -1%. On the other hand, the U.S., the world's number one in sales, China, the number two, and other Asian countries except Japan and China have higher average annual growth rates than the rest of the world, at 5.4%, 11%, and 5.7%, respectively. In particular, the U.S. stands out from the other 12 countries and regions in terms of sales value, accounting for 40% of global ethical drug sales in 2019*3.

Figure 1: Global Ethical Pharmaceutical Sales by Region/Country
Note: AAA stands for Asia, Africa, and Australasia
Source: Copyright (C) 2021 IQVIA. Prepared by Policy Research Institute based on IQVIA World Review Analyst 2010-2019 (All rights reserved)

Figure 2 shows the trends of total consolidated sales, total overseas sales, and the ratio of overseas sales of the 14 major Japanese pharmaceutical companies*4, 5. In the past two years, overseas sales have exceeded domestic sales in Japan. Looking at the 14 companies individually, 13 of the 14 had larger overseas sales and consolidated sales-to-overseas sales ratios in FY2019 than in FY2011. In terms of single-year overseas sales, nine of the 14 companies had overseas sales exceeding 100 billion yen in FY2019, and these top nine companies alone accounted for more than 95% of the 14 companies' total overseas sales (6,286.3 billion yen) in FY2019.

Next, we investigated the target diseases, technologies (modalities), development regions, development and sales methods, and origins of the overseas products of the top 9 companies in terms of overseas sales*6 and analyzed the relationship between each item and sales to see if any unique or common characteristics could be found among the companies.

Figure 2: Total Consolidated Sales and Overseas Sales Ratio of Major Japanese Pharmaceutical Companies (14 companies)
Note: 14 Japanese pharmaceutical companies: Astellas Pharma, Eisai, Otsuka Holdings (Otsuka HD), Ono Pharmaceutical, Kyowa Kirin, Santen, Shionogi, Daiichi Sankyo, Dainippon Sumitomo Pharma, Takeda Pharmaceuticals, Mitsubishi Tanabe Pharma Corporation, Chugai Pharmaceutical, Hisamitsu Pharmaceutical, Zeria Pharmaceutical
Source: Prepared by Policy Research Institute based on financial data from SPEEDA (Userbase, Inc.)

Survey Methodology

Companies surveyed

Astellas Pharma, Eisai, Otsuka Holdings, Kyowa Kirin, Shionogi, Daiichi Sankyo, Dainippon Sumitomo Pharma, Takeda, and Chugai: Top 9 companies in terms of overseas sales

Data source

We used the financial reporting materials for the fiscal year ended March 31, 2020 (financial statements, supplementary materials, DATABOOK, FACT sheets, etc.) published on the websites of each company. However, for Otsuka HD, Kyowa Kirin, and Chugai Pharmaceutical, we used their financial reports for the fiscal year ended December 31, 2019, because their fiscal year ends in December. Additional information such as generic name, target disease area, modality, sales region, year of launch, and origin of creation was obtained from "Tomorrow's New Drugs" (Technomic), Cortellis Competitive Intelligence (Clarivate), and press releases of each company, while ATC classification was obtained from "Tomorrow's New Drugs" and KEGG DRUG Database*7 was used for ATC classification.

Survey Items

The following information was collected: product name (generic/representative product name), main target disease area (ATC classification), modality, main sales region, overseas sales amount (FY2019), overseas launch year, origin of creation (origin), and overseas development company.

Number of selected items

Each company's FY 2019 overseas sales products were selected in descending order of sales. For companies with large overseas sales, we selected a larger number of products until they accounted for at least 50% of the pharmaceutical business sales ( Table 1 ).

Table 1: Representative top-selling products by overseas sales of each company
Note: ATC classifications are as follows: B Blood and blood-forming organs, C Cardiovascular system, D Dermatological drugs, G Urogenital system and sex hormones, J Systemic anti-infectives, L Antineoplastics and immunomodulators, M Musculoskeletal system, N Nervous system, R Respiratory system. For products not assigned an ATC classification code, we used what would be expected from a related drug.
Source: Compiled by NRI based on each company's financial reports, "Tomorrow's New Drugs" (Technomic Co., Ltd.), Cortellis Competitive Intelligence (Clarivate), and KEGG DRUG Database.

Results

The top product groups, target diseases, origins, modalities, etc., of the nine Japanese pharmaceutical companies with the highest overseas sales were surveyed. In terms of sales, the number of products was also higher than the majority in the two categories of antineoplastics and immunomodulators (ATC Classification L) and neurology (ATC Classification N). In terms of sales, anti-cancer drugs and immunomodulators were the most important, followed by neurology ( Figure 3, upper panel ). In terms of number of products and sales by modality, small molecules accounted for about 70% of the total sales ( Figure 3, lower panel ). The same order of ranking was also observed in terms of sales value*8, with anti-cancer drugs and immunomodulators, gastrointestinal tract and metabolic effects (ATC Category A), neurology, and anti-infectives for systemic use, in descending order of number of items. The sales region is characterized by a sales volume of 1,000,000 units per year.

Figure 3 Top sales and total sales of each company by ATC category and modality, and their percentages
Note 1: Prograf's ATC classifications are L and D (dermatological drugs), but L is selected here.
Note 2: For convenience, Eisai's license income and sales of business related to pharmaceutical raw materials and others are added to the sales of Lenvima, and Chugai's royalty and other income and other operating revenues are added to the sales of Hemlibra.
Source: Prepared by the National Institute for Policy Studies based on Table 1.

In terms of sales regions, all so-called blockbusters with sales exceeding 100 billion yen were sold in the United States. The number of products with in-house origins accounted for approximately 80% (35/45 = 78%) of the top-selling products of each of the nine companies surveyed this time (counting active ingredient molecules). Excluding those products that were acquired as a result of acquisitions, etc., the percentage was 64% (29/45) ( Fig. 4 left ). In terms of origins and sales, 72% of the total originated in-house, including those that became in-house originated as a result of acquisitions, etc. ( Fig. 4, right ). In terms of sales of products that are licensed out (and mainly exported), most of the products are blockbustered by the companies to which they are licensed out (or exported)*9, indicating that the percentage of products that are blockbusters either sold in-house or licensed out (including acquisitions, etc.) is 80%. The percentage of products developed by the top 25 global pharmaceutical companies with the most R&D items in 2020 was approximately 55%*10, and the percentage of products developed by the five Japanese companies included in the top 25 was approximately 52%*11. In light of these figures, it can be said that 78% of the top products in each of the nine companies' top product lists are of in-house origin, which is a high figure.

Fig. 4 Number of top sales and total sales of each company by origin of origin, and their percentages
Note 1: Eisai's 29 products account for 64.4% of the 45 products, but the percentage is 65% for the sake of total sales of 100%.
Note 2: Eisai's license revenue and sales of pharmaceutical raw materials, and Chugai's royalty and other income and other operating revenue are added to "In-house" sales.
Source: Prepared by the National Institute for Policy Studies based on Table 1.

4. Conclusion

We conducted a survey and analysis of the top products in terms of overseas sales in fiscal 2019 at the top nine major Japanese pharmaceutical companies with large overseas sales. At present, small molecules are the most common modality among the top 9 Japanese pharmaceutical companies in terms of overseas sales, accounting for approximately 70% of total sales. In terms of main therapeutic areas, antineoplastics, immunomodulators, and neurology drugs accounted for a high percentage in terms of both number of products and sales. In terms of development and sales methods, there were cases in which the company sold its own-origin products or in-licensed products from other companies through its own sales network, cases in which the company out-licensed its own-origin products mainly to overseas companies or to its parent company to generate milestone and royalty income and thereby generate overseas sales, and cases in which the company sold its own-origin products to overseas companies through its own sales network or to its parent company. The top nine companies in terms of overseas sales also varied in their methods of achieving overseas sales, including the development and marketing of their own origin products jointly with overseas pharmaceutical companies to receive sales proceeds, milestone payments, and royalty income. In terms of sales regions, products that have become blockbusters overseas always include the U.S. in their sales regions. In terms of the origin of the products, most of the blockbuster products were sold in the U.S., while the blockbuster products were sold in the U.K. and Europe. In terms of origin, the nine major Japanese companies' top-selling products in overseas sales tended to have a high percentage of in-house originations in terms of both number of products and sales. However, since the data presented here is a snapshot limited to the top-selling products of the nine domestic companies in terms of overseas sales in FY2019, it will be necessary to analyze the data over time by adding information on other products not included in the top-selling products in terms of overseas sales and domestic products in order to conduct a more rigorous analysis of the factors.

( Akira Nakao, Senior Researcher, Pharmaceutical and Industrial Policy Research Institute)

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