The Pharmaceutical Industry at a Glance Characteristics of the top products in terms of overseas sales of major Japanese pharmaceutical companies

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

1. Introduction

Figure 1 shows the trends of national medical expenses, drug ^costs1) and their ratios in Japan based on the data of the Special Committee on Drug Prices (159th meeting) of the Central Social Insurance Medical Council. In addition to the aging of the population, the introduction of new technologies and advances in medical care have contributed to a steady increase in national healthcare expenditures in Japan. Under such circumstances, the ratio of drug costs to national healthcare expenditures has been maintained at around 20% over the past 20 years, and drug costs have not exceeded 10 trillion yen per year. The further promotion of generic drugs makes it unlikely that Japan's pharmaceutical market will expand dramatically in the future.

Figure 2 shows global ethical drug sales trends for 13 countries and regions based on IQVIA World Review Analyst 2010-2019. Global ethical drug sales have increased at a compound annual growth rate of 4.0% over the nine years from 2010 to 2019. In each country, the U.K. showed an increase of 4.2%, which is on par with the CAGR of 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 Asian countries (excluding Japan and China) are outpacing the global average annual growth rate 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 ²⁰¹⁹²⁾.

2) In this global environment surrounding Japan, Japan-based pharmaceutical companies have been expanding their sales targets from Japan to overseas as one of their growth strategies to broaden the sales channels for their pharmaceutical products. Figure 3 shows the total consolidated sales and total overseas ^sales3) of the 14 major Japanese pharmaceutical companies and the ratio of overseas sales to total ^sales4). As the figure shows, the total consolidated sales and the ratio of overseas sales of the 14 so-called "major" to "quasi-major" Japanese pharmaceutical companies have shown an increasing trend, with overseas sales exceeding domestic sales in Japan in the past two years. 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.

The author was interested in what kind of pharmaceutical products the major Japanese pharmaceutical companies were selling to increase their overseas sales, and decided to investigate the target diseases, technologies (modalities), development regions, development and marketing methods, origins of creation, and other factors for the overseas products of the top 9 companies in terms of overseas ^sales5). 5) We then conducted a factor analysis of the relationship between these items and sales to see if any unique or common characteristics could be found for each company.

2. 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 each company's website, as well as the financial reporting materials for the second quarter of the fiscal year ending March 31, 2021. However, for Otsuka HD, Kyowa Kirin, and Chugai Pharmaceutical, information in the financial reports for the fiscal year ended December 31, 2019 and the third quarter of the fiscal year ending December 31, 2020 was used because the fiscal year ends in December. Additional information such as generic name, target disease area, modality, sales region, launch year, and origin of creation are from Tomorrow's New Drugs (Technomic Corporation), Cortellis Competitive Intelligence (Clarivate Analytics), and press releases of each company; ATC classification is from Tomorrow's ⁽ New Drugs of Tomorrow, KEGG DRUG ^Database6) was used for ATC classification.

Survey Items

Product name (generic name/representative product name), main target disease areas (ATC classification), modality, main sales regions, overseas sales (FY 2019 results and FY 2020 forecast), overseas launch year, origin of creation (origin) and overseas development companies, development products after Phase III and their development stages (stage update information (The information on stage updates reflects press release information, etc. up to the end of December 2020).

Number of selected items

Each company's FY2019 overseas sales products were selected in descending order of sales. For companies with large overseas sales, a larger number of products were selected, until at least 50% of their pharmaceutical business sales were picked up.

3. RESULTS

Astellas' top products in terms of overseas sales in FY2019 are, in order, Ixtanji, Prograf, Betanis, Lexiscan, Harnal, Funguard, and Vesicare, followed by the anti-tumor drug Ixtanji, which is expected to increase sales significantly in FY2010. On the other hand, Prograf, Harnal, Funguard, and Vesicare are gradually decreasing their overseas sales as their exclusivity period expires due to patent expiration. Ixtanzi and Lexiscan are in-licensed products, but are characterized mainly by the fact that they are small molecule in-house originator drugs developed in-house overseas and sold through the company's own sales network.

Eisai's top-selling products overseas in FY2019 are the anti-tumor drugs Lenvima and Halaven, followed by the neuropsychiatric agents Inovelon, Methycobal, Aricept, and Fincopa Sales of Lenvima are expected to increase further in FY2010. The main sales territory of Aricept, whose patent has already expired, is shifting from Europe and the United States to Asia, including China, and Latin America. In addition to the increase in sales of Lenvima, licensing income including milestone and upfront payment income related to Lenvima and business related to pharmaceutical raw materials are also making a significant contribution to overseas sales. The company is expanding its own-origin small molecule drugs, mainly for oncology and central nervous system diseases, overseas through its own sales network.

Otsuka HD's top-selling products overseas in fiscal 2019 include Otsuka Pharmaceutical's ABILIFY-related products, including ABILIFY Maintainer; Rexarti, a treatment for psychiatric disorders; SAMSCA, which has an additional indication for the rare disease autosomal dominant polycystic kidney disease; and Lonsurf, an antitumor drug from Jin Arc and Taiho Pharmaceutical. Sales growth of ZinArc is expected in FY2020. Both products are small molecule drugs of their own origin, developed in-house overseas and marketed in-house mainly in Europe and the United States.

Kyowa Kirin's top-selling products overseas in FY2019 are Creezbyta, a bone disease treatment, Abstral, a product of a subsidiary, Poteligeo, an anti-tumor drug, and Fasenra, a licensed product. With the exception of Abstral, which was developed by ProStrakan (now Kyowa Kirin), the other products are antibody drugs of in-house origin, and are sold through the company's overseas sales network. On the other hand, Shionogi out-licenses Fasenra, an in-house origin antibody drug, to AstraZeneca and earns royalty income.

Shionogi's main overseas sales in FY2019 are related to the out-licensing of its HIV franchise products Tebikei, Trimec, Jaluka, and Dauvate, as well as Crestor, a metabolic disease drug, although sales of Crestor will decrease in FY2020 due to patent expiration, However, sales of the HIV franchise products are expected to remain at the same level as the previous year.

Daiichi Sankyo's top products in terms of overseas sales in FY2019 are Olmetec, a hypertension drug, followed by Lixiana, an anticoagulant, and Injectafor and Venofer, anti-anemia drugs. Other than the products of its overseas subsidiary American Regent, the company's products are small molecule drugs of its own origin and developed in-house; in FY2020, Enhertz, an antibody-drug conjugate (ADC) drug of its own origin co-developed with AstraZeneca, is expected to make a significant contribution to overseas sales.

DSP's top products in terms of overseas sales in FY2019 were LATUDA, a psychiatric drug, BROVANA, a COPD drug, MEROPEN, an antibiotic, and APTIOM, an antiepileptic drug, and similar sales are expected in FY2010. The company's own subsidiary Sunovion, based in North America, markets LATUDA, an in-house developed product of its own origin, while Meropen is marketed in-house in China and elsewhere. Both products are small molecule drugs.

Takeda's top-selling products overseas in fiscal 2019 include Entyvio, an inflammatory bowel disease drug; Gamagard, a blood fractionator; Vyvanse and Trintellix, psychiatric drugs; Advate, a hemophilia drug; Velcade, Ninlaro, and Leuplin, antitumor drugs; Takhzyro, a treatment for hereditary angioedema Takhzyro, and others. Trintex is a product for which Chugai obtained development rights in the U.S. after in-licensing from Lundbeck, and Leuplin is a peptide drug of its own origin, but the other products were added through acquisitions of foreign companies, and the company has a wide variety of disease areas and modalities.

Chugai's top overseas products in terms of sales in FY2019 are Actemra, an autoimmune disease treatment, and Alesensa, an anti-tumor drug, which are mainly exported to its parent company, Roche. In FY2020, the export value of Hemlaibra is expected to increase and royalty income is expected to rise. In FY2020, Hemlaibra exports are expected to grow and royalties and other revenues are expected to increase, leading to a significant increase in overseas sales. Alesensa is a small molecule drug of its own origin, while Actemra and Hemlibra are antibody drugs of its own origin.

The results of the survey on the top product groups, target diseases, origins, modalities, etc. of the top 9 Japanese pharmaceutical companies in terms of overseas sales showed that the main target diseases were divided into 8 ATC categories, with 14 (including 11 for anti-cancer drugs), 10 and 2 for immunomodulators (ATC category L) and nervous system (ATC category N), respectively. The two categories were in the majority, with 10. In terms of sales, anti-cancer drugs and immunomodulators had the largest sales, followed by neurology drugs (Figure 4, upper panel). In terms of number of products and sales by modality, small molecules accounted for about 70% of the total sales (Figure 4, lower panel). 48% of the top 100 products in global sales in 2019 were synthetic chemical drugs (small molecules, nucleic acids, peptides, etc.), and in order of number of products by drug class, anti-cancer drugs, immunomodulators, and digestive drugs accounted for the largest share of sales (Figure 4, upper panel). The same order was also observed in terms of sales ^value7).

In terms of sales regions, all so-called blockbusters with sales exceeding 100 billion yen were sold in the United States. The nine companies included in the survey accounted for approximately 80% (35/45 = 78%) of the top-selling products of each company (counting active ingredient molecules). Excluding those products that were acquired as a result of an acquisition, etc., the share was 64% (29/45) (Figure 5, left). In terms of origin and sales, 72% of the sales were for in-house origins, including those that became in-house origins as a result of acquisitions, etc. (Figure 5, right). In terms of out-licensed products (and products mainly exported), most of the products were blockbustered by out-licensed (exported) ^companies8), and the proportion of in-house originations (including acquisitions, etc.) of products that were blockbusters either sold in-house or by out-licensed companies was found to be 80%. In 2020, the percentage of in-house originations developed by the top 25 global pharmaceutical companies with the most R&D items was approximately ^55%9). 9 ⁾ In addition, when the number of products developed by the five Japanese companies in the top 25 is added together, the percentage of in-house originations is approximately ^52%10). 10) Given these facts, the 78% share of in-house originated products in the list of top-selling products by each of the nine companies can be considered a high figure.

Next, we surveyed the nine Japanese pharmaceutical companies on the number of products in late-stage clinical development that are being developed overseas. Table 2 summarizes the overseas development products in Phase III or higher as of the Q2 FY03/2021 financial report (Otsuka HD, Kyowa Kirin, and Chugai as of the Q3 FY12/2020 financial report) and new chemical entities (NCEs) that were launched or approved in FY2020. (Note that the updated stages of development products reflect press release information up to the end of December 2020).

Since most of the NMEs are still in the unapproved stage, the details of each company's NMEs are omitted, but it was found that the major indications were divided into seven ATC categories, with anti-cancer and immunomodulatory agents (ATC Category L) accounting for 10 and neurology (ATC Category N) for 9, with the two categories accounting for nearly 60%. By modality, small molecules accounted for 7 and 6 cases in L and N, respectively (Figure 6, top), with small molecules accounting for 64% (21/33) of the NMEs of the nine companies. Although it is not possible to simply compare the results with those in Table 1, which lists only the top-selling products, small molecules accounted for the majority of NMEs in the modality of late-stage ^{development11)} (Fig. 6, bottom).

In terms of origin, 67% (22/33) of late-stage development products were in-house origins, while half (33% (11/33)) were in-house origins when excluding products that became in-house origins through acquisition or other means (Fig. 7).

4. Summary

We surveyed and analyzed the top-selling products and late-stage products in overseas development by the top nine major Japanese pharmaceutical companies with large overseas sales in the 2019-2020 fiscal year. At present, small molecules are the most common modality among the top-selling products in overseas sales of the nine Japanese pharmaceutical companies, accounting for about 70% of their sales in terms of value. In terms of main therapeutic areas, anti-cancer drugs, immunomodulators, and neurology drugs accounted for a high percentage in terms of both the 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. In other cases, the top nine companies in terms of overseas sales were engaged in joint development and marketing of their own origin products with overseas pharmaceutical companies to receive sales proceeds, milestone payments, and royalty revenues. 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, the major domestic blockbusters were almost all out-licensed to the US companies. 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 the 2019-2020 period, it will be necessary to analyze the data over time by adding information on other products that were 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 behind the trends. 3. Results

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