From JPMA Business Model of the Pharmaceutical Industry and Pharmaceutical Industry Policy ～On the Occasion of the Publication of the Policy Proposal 2023
On February 16, 2023, the JPMA President's Press Conference was held. At the beginning of the press conference, we emphasized the need for a pharmaceutical industry policy as a national strategy.
The creation of new drugs is an extremely risky and specialized business, but for its perpetuation, pharmaceutical companies invest the cash they generate (operating CF) in intangibles such as products, M&A, and pipeline acquisitions for future growth, as well as in capital expenditures and shareholder returns. At the press conference, the nine domestic companies that have achieved new drug creation through such reinvestment accounted for 70% of total sales (53 domestic companies), according to data presented at the conference. He also mentioned that, while domestic sales are shrinking, these companies contribute significantly more to the country in terms of tax revenue than other industries, and called for the promotion of industrial policies that support companies that create new drugs that should compete on a global scale.
He then emphasized the importance of a pharmaceutical industry policy that firmly fosters companies that create innovative new drugs and companies that provide a stable supply of high-quality pharmaceuticals.
Japan Pharmaceutical Manufacturers Association
Chairman Yasushi Okada
The current drug price system and policies, which strictly evaluate innovation, such as the annual reduction of drug prices for patented products, have stagnated the Japanese pharmaceutical market, discouraged companies from investing, and worsened drug lag and drug loss. To break this trend and realize the pharmaceutical industry's mission of extending healthy life expectancy and contributing to economic growth, it is necessary to establish an attractive pharmaceutical market that attracts investment by implementing pharmaceutical industry policies as a national strategy.
In order to achieve this, it is essential to pursue a "balanced" pharmaceutical market, where the Japanese pharmaceutical market as a whole is expected to grow slightly and the market for patented products is expected to grow by 4-5%. Specifically, new drugs should be replaced by generics as soon as possible after patent expiration, and prices of long-listed drugs should be reduced as soon as possible. We have no objection to further pursuing this "balance". However, this will not be possible under an industrial structure that causes problems with the stable supply and quality of generics. We pointed out that sufficient government support for generic companies that contributes to stable supply is necessary.
In an environment of dramatic advances in digital technology and major changes in the composition of the population, it is essential to improve the efficiency of healthcare. A national debate on an effective healthcare delivery system is needed. He also expressed his belief that the financial resources generated by efficiency improvement should be reallocated to further investment in innovation to improve the quality of national healthcare, as well as the sustainability of social security.
In summary, he stated that the creation of an efficient medical care system and a well-functioning drug pricing system, which will enable a growth market comparable to that of major developed countries, while at the same time ensuring both the sustainability of the universal health care system and the evaluation of innovation, are options that the nation should take now that it is at a major turning point. He also explained the contents of the "JPMA Policy Proposal 2023," which was made public on the day of the meeting.
For details of the Chairman's press conference and the "JPMA Policy Proposal 2023," please refer to the JPMA Newsletter March 2023 No.214 Top News.
(From the JPMA President's Press Conference held on February 16, 2023)
Japan Pharmaceutical Manufacturers Association (JPMA)
Japan Pharmaceutical Manufacturers Association (JPMA)
JPMA is a voluntary association of R&D-oriented pharmaceutical companies, established in 1968, with the motto of "realization of patient-participatory medicine," and has contributed to global healthcare through the development of innovative new drugs for ethical use.
JPMA is engaged in a multifaceted program of activities to solve various problems common to the pharmaceutical industry, to deepen understanding of pharmaceuticals, and to promote international collaboration. In addition, we are committed to the sound development of the pharmaceutical industry, particularly by strengthening our policy formulation and advocacy activities, addressing internationalization, and reinforcing our public relations system.
Aiming to contribute to society through the development of new drugs Japan Pharmaceutical Manufacturers Association