The Pharmaceutical Industry at a Glance Japan's Presence in the Pharmaceutical Market Analysis of Overseas Sales Share of Japanese Companies

According to IQVIA's World Review Analysts, the Japanese market was the second largest single country in the world prior to 2012, second only to the US. However, it was overtaken by China in 2013 and is now the third largest market in the world. In addition, looking at the share of the Japanese market in the world since 2010, it was 11.6% in 2011, but has continued to decline since then, reaching 6.9% in 2018. (Figure 1)

Under these circumstances, some Japanese-headquartered pharmaceutical companies (Japanese companies) are making efforts to increase the share of their sales overseas to ensure their survival and development.

For example, looking at the eight largest Japanese ^companies1), seven companies increased their overseas sales ratio between 2010 and 2018 (Figure 2). (Figure 2)

In terms of total sales (domestic + overseas), 6 of the 8 companies increased in FY2018 compared to FY2010, but only 2 companies increased their domestic sales, while the remaining 6 companies decreased their domestic sales, indicating that many companies are compensating for the decrease in domestic sales by increasing their overseas sales.

Figure 3 shows the ratio of overseas sales (or sales outside Europe for European ^firms2) for the eight largest U.S. firms and the eight largest European firms, ^{respectively,} and while sales outside the U.S. varied from 20% to 60%, sales outside Europe for European firms were generally high, ranging from 60% to 80%. The percentage of sales outside of Europe was generally high, ranging from about 60% to 80%. The simple average of the ratio of overseas sales for the eight largest Japanese, U.S., and European firms shows that Japanese and European firms increased their ratio of overseas sales, while U.S. firms showed a declining trend.

The eight largest Japanese companies' overseas sales ratios have been on an upward trend since 2010, but what is the share of Japanese companies in the global market? The results are shown in Figure 4. (Figure 4)

From 2010 to 2018, the share of Japanese companies in the overall global market was 9.1% ($69.466 billion) in 2011, but has continued to decline since then, reaching 5.4% ($58.083 billion) in 2018. One reason for this is the decrease in the number of Japanese companies in the Top 100 (from 20 in 2010 to 12 in 2018). The main reasons for this can be attributed to the relatively low growth rate of Japanese companies compared to the growth of the global market and the increase in the number of Chinese companies in the Top 100 (from 0 in 2010 to 7 in 2018) due to the expansion of the Chinese market and other factors. The number of U.S. companies in the Top 100 also decreased from 30 to 23, but their sales increased (from $259.03 billion in 2010 to $368.685 billion in 2018). Although the number of companies decreased due to mergers and cases of companies changing corporate nationality, the overall sales of U.S. companies increased due to the significant sales growth of several U.S.-originated biopharmaceutical companies. In addition to the aforementioned China, India (4 companies in 2010 → 9 companies in 2018) is another country that saw an increase in the number of companies in the Top 100.

The nationalities with the highest global market shares in 2018 were the United States, Switzerland, the United Kingdom, Japan, and Germany, in that order. Figure 5 shows the share of sales in major countries by company nationality. ³⁾

While U.S. and European firms had higher shares in their home countries than in other countries, they also gained market share in other countries, while Japanese firms had a prominent share in Japan, indicating that they are more dependent on the domestic market than firms from other countries in the top tier. Note that the analysis in Figures 4 and 5, based on IQVIA World Review Analysts, does not include overseas sales from royalty income, but Figures 2 and 3, based on each company's annual securities report and annual report, do. Some Japanese companies license their products to Western companies with global sales networks and receive profits in the form of royalties. Some companies have been successful in this regard on an individual basis, but on an overall basis, Japan's position as a license provider to global companies is becoming less significant. ⁴⁾