Pharmaceutical Industry at a Glance Survey on Emerging Biopharma Companies (EBPs) with Developmental Products in Japan

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The Office of Pharmaceutical Industry Research Principal Investigator Kiyoshi Morimoto
The Office of Pharmaceutical Industry Research Principal Investigator Chie Yoshiura
The Office of Pharmaceutical Industry Research Principal Investigator Daisuke Kanai

Summary

1. Introduction

In the global trend of new drug discovery, the number of drugs and their market size are expanding every ^year1), and the U.S. is the center of the world in drug discovery, among them. The Office of Pharmaceutical Industry ResearchIn this report, we surveyed the countries of origin of basic patents (nationality of the filing organization indicated in the patent specification) and the originating organization for each product approved in two or more of the three regions between 2013 and 2022 (globally approved products), and found that products originating in the United States accounted for almost half of all products, and that among these products originating in the United States, those originating in emerging biopharmaceutical companies (emerging biopharmaceutical companies) accounted for about one-fifth of all products. We have reported that the presence of emerging biopharma ( ^EBP2 ) companies has been increasing over the ^{years3, 4, 5)}.) In addition, we have analyzed these U.S. EBPs and the products they have created in detail in terms of start-ups, funding, patent applications, licensing, and product characteristics, and published position papers on their ^{characteristics6, 7)}.

Although Japan has been the second largest drug discovery country after the U.S., its position has been declining year by year, and there is growing concern that its drug discovery capability is declining. One of the reasons for this has been pointed out as a delay in the development of EBPs. The role of domestic EBPs in Japanese drug discovery is very small at this stage, and our survey shows that there are no products derived from domestic EBPs among the globally approved products from 2013 to ²⁰²²⁵⁾. In this context, the Japanese government, recognizing the issues of "declining international competitiveness of Japan's pharmaceutical industry and lack of a comprehensive and holistic strategy and implementation system including industry, academia, and government," has announced in the interim ^report8) of the "Conceptual Council for Prompt Delivery of the Latest Pharmaceuticals to the Public by Enhancing Drug Discovery Capability," that "the pharmaceutical and medical industries as a whole are expected to become an important growth area where Japan's scientific and technological capabilities can be fully utilized. The Council also stated that "Japan should aim to become a world-class center of drug discovery" and proposed a variety of measures. One of these measures is the "continuous creation and cultivation of seeds in academia and start-ups.

In order to understand the current status of domestic EBPs, this report surveys domestic EBPs that currently have products under development to determine their origins, funding, expertise, pipelines, as well as the modality, area, and origin of each product.

Survey Methodology

Based on the database of Evaluate ^PharmaⓇ by Evaluate (as of July 2025), companies with products in ^{development9)} at the time of the survey were selected at The Office of Pharmaceutical Industry Research. For domestic EBPs, we selected Japanese companies established during 1990-2024 with the company classification of Biotechnology and Specialty. In addition, domestic EBPs were selected by referring to Clarivate's Cortellis Competitive Intelligence, Citeline's ^{PharmaprojectsⓇ} | Citeline, 2025, Nikkei Biotechnology Yearbook 2025, and various websites. The EBPs were finally selected by referring to the following websites.

In section 3-1, we analyzed 108 of the selected companies by referring to various websites based on Userbase's speeder startup information research ^.10) In sections 3-2 and 3-3, we obtained information on the development pipelines of the selected companies based on data from Evaluate Pharma, and in section 3-4, we analyzed the development pipelines of the selected companies based on data from Evaluate Pharma. 3-2. and 3-3., we analyzed the development pipelines of 235 products from 93 companies for which information could be obtained based on data from Evaluate Pharma at The Office of Pharmaceutical Industry Research. The analysis was performed for 108 selected domestic EBPs.

Results

3-1. origins and funding of domestic ebp

Of the 108 domestic EBPs selected, we investigated the background of the founders of the startups, and found that 76 companies had founders from academia (59 from academia alone), 24 companies had founders with experience in pharmaceutical ^companies11), (17 from pharmaceuticals alone), and others (entrepreneurs, venture capitalists, trading companies, biotech companies, etc.). venture capitalists, trading firms, biotech firms, etc.) were 20 companies (duplicate counts are available). While 59 companies had founders exclusively from academia, only 18 companies had founders from multiple categories, such as those with pharmaceutical experience or other members (Table 1, Figure 1). The founding members were almost exclusively Japanese.

When we surveyed the sources of funding in the early stages of the company's founding, 31% came from venture capital (VC), 29% from corporate venture capital (CVC), 27% from the founders, and 44% from other individuals, with no investment from universities or public institutions (Table 2).

We surveyed post-foundation financing. The total amount of financing within three years of founding was 1.01 billion yen (mean) or 410 million yen (median) per firm. Some of these firms also received funding from public institutions (national government or universities), which amounted to 210 million yen (mean) or 169 million yen (median). However, not many firms were identified as having received funding from public institutions (18 firms) (Table 3).

The time from inception to IPO and the amount raised were investigated for the 42 companies that achieved IPO (Table 4). The median time to IPO was 2.93 billion yen.

We examined the types of investment firms investing in domestic EBPs (Figure 2). A total of 261.1 billion yen was invested in 109 domestic EBPs, of which 160.6 billion yen (1507 investments) came from venture capital (VC). Next was 61.2 billion yen from corporate venture capital (CVC) (494 cases), followed by 18.9 billion yen from the national government and universities (113 cases), and 8.2 billion yen from individuals. Investments from pharmaceutical-related CVCs were also seen in some cases originating from joint research.

The amount of domestic and foreign investment in the EBPs surveyed was 203.1 billion yen (88%) and 31.0 billion yen (12%), respectively, with the majority coming from domestic sources (Figure 3). Investments from the Republic of Korea (8.47 billion yen) and the United States (8.15 billion yen) followed, and these two countries and investments from the British Isles, which are believed to be tax havens, accounted for about three-fourths of all foreign direct investments (Figure 4).

3-2. number of items owned by domestic EBP companies

The development pipeline (Phase 1-Filed) of the 93 companies that could be surveyed this time totaled 235 ^products12), of which 941 products were originated by Japanese institutions or companies at the time of the survey, which means that approximately 1/4 of the products were derived from domestic EBPs.

The average number of items per domestic EBP was 2.5 items. The average number of low-molecular-weight products per company was 2.9, including 126 low-molecular-weight products ⁽ Table 5). Nine companies had both biotech and low molecular weight products.

Next, we categorized the number of EBPs in Japan by founder (Table 6, Figure 5). The number of products owned per company was 2.2 for companies whose founders were from academia only, while it rose to 2.7 for companies whose founders were from other categories in addition to academia. Incidentally, the average number of products owned per firm was 3.9 for EBPs that included founders from pharmaceutical-related backgrounds.

Next, we examined the modality classification by founder origin (Table 7). The categories that included academia were dominated by biotech products, while those with a pharmaceutical background were dominated by small molecule products. However, among the products developed by companies with founders from academia, slightly more than one-third = (33+13)/(88+41) were small molecule products, 10 out of 46 products were repositioned, and the majority of the remaining 36 products were New Molecular Entity (NME) products (not shown in the chart).

Because of the large market size and high revenue potential in the U.S., it is strategically important to conduct clinical trials in the U.S. The U.S. is the only country in the world where clinical trials are conducted in the U.S. Therefore, we investigated the rate of clinical trials conducted in the U.S. (Table 8). The highest rate of clinical trials in the U.S. was for EBPs with a pharmaceutical background, followed by products from companies whose founders were from multiple categories, including academia.

3-3. pipeline analysis of domestic ebp-owned products

An analysis of 235 pipeline products owned and developed by domestic EBPs was conducted. Oncology was the most common target area with 61 items, followed by CNS with 52 items and sensory nervous system with 18 items (Figure 6).

In terms of modality, biotech products were classified and analyzed in detail (Fig. 7). The 126 small molecule products were followed by 33 cell therapy products, 18 proteins/peptides, and 15 monoclonal antibodies.

Summary and Discussion

4-1. comparison with U.S. EBPs in terms of origins and financing of domestic EBPs

An examination of the origins of domestic EBPs with developed products revealed that the overwhelming majority of companies were founded exclusively by founders from academia, and not many were founded in collaboration with other categories (e.g., from pharmaceuticals, entrepreneurs, etc.). Funding for domestic EBPs was often provided by individuals, in addition to funding from domestic VC/CVC. No public funds were provided at the time of the establishment of the EBPs, but a median of about 170 million yen was invested in the EBPs thereafter, although the number was small. Although it was about 10 years ago, the amount of money received from the National Institute of Health (NIH) by the U.S. EBP, which created a global product (around 1.5 million dollars) ^{6, 7),} was comparable to that of the U.S. EBP. Funding was overwhelmingly from domestic sources, with few funds coming from outside the country, and the source of funding was skewed toward the U.S. and South Korea. The Office of Pharmaceutical Industry ResearchThe previous studies conducted by the "Japan EBP" and "Korea EBP" (see Figure 2) have shown that in the U.S. EBPs that created global products, the percentage of entrepreneurs from a single category was low, and that entrepreneurs from multiple categories were assembled, each fulfilling his or her own ^{role6, 7)}. However, in terms of elucidating disease mechanisms, identifying key factors, and discovering the seeds for drug discovery, it is important to have the qualities of a researcher, and to be able to carry out clinical development using human subjects, it is necessary to have created a compound with appropriate characteristics and to have developed it into a drug. The fact that a compound has reached the stage of clinical development in humans indicates that it has created a compound with appropriate characteristics. However, the researchers themselves are responsible for aspects other than their qualifications, such as fundraising, target product profile creation, and intellectual property strategy. This study shows that the number of products per company tends to be higher for companies founded by researchers from multiple categories than for EBPs founded by researchers from academia alone, and that the rate of clinical trials in the U.S., which requires a large amount of funds and strategic thinking in drug discovery, is high. The importance of the participation of members with various specialties can be seen.

As mentioned at the beginning of 3-2, domestic EBPs accounted for only about 1/4 of the items developed by Japanese originators. On the other hand, in the U.S., about 2/3 were EBPs. In Japan, the drug discovery startup ecosystem is immature, and the attractiveness of startups is extremely low. ⁽ Okuyama ¹⁴⁾ showed that in domestic EBPs, "the fact that the startup is a corporate spin-off" and "the fact that the person with corporate R&D experience leads the R&D of the startup" have a positive impact on the startup's valuation and total funding. We believe that corporate R&D experience contributes greatly to the value of an EBP. Of course, in establishing and operating a domestic EBP, there is likely to be support from people from the pharmaceutical industry and VCs, but the basic policy tends to be governed by the founding blueprint. As in the case of successful EBPs in the U.S., we felt the need for specialists in each field to participate in the management of the company from the beginning from the standpoint of accountability, and to start and manage the EBP with a desire to collaborate in a way that takes advantage of their respective expertise.

In our position papers ^{6 and 7)}, we reported that the funds raised by the US EBP, which has global products, amounted to 83-130 million dollars by the time it achieved an IPO, which is 3-7 times larger than the amount raised by the domestic EBP of approximately 3 billion yen, although this amount depends on the exchange rate. -Although this amount depends on the exchange rate, it is three to seven times larger than the amount raised by domestic EBPs, which is about ¥3 billion. The IPO achievement rate was 67-70% for U.S. EBPs and about 40% for domestic EBPs. In terms of financial comparison, the U.S. ^{EBPs6,7) that} we have studied in the past are from successful companies that already own global products (products approved in two or more regions among Japan, the U.S., and Europe), while the domestic EBPs studied in this paper are from companies that have some approved products but do not own global products. Therefore, a direct comparison cannot be made. On the other hand, while data on the financing of U.S. EBPs, for example, are from more than 10 years ago and are likely to be even higher now, it can at least be said that the financing of successful EBPs in the U.S. was much higher than that of domestic EBPs with products under development. Furthermore, domestic EBPs have a large individual financial burden at the time of start-up and do not have the support of the government or universities. There is also little direct inflow of funds from overseas. In fact, ^Ashida15) reported that the amount of VC investment in Japan and the U.S. varied by a factor of 3 to 10 from 2017 to 2021. It is possible that domestic VCs are receiving investment from foreign institutional investors, but the percentage of direct investment is small.

As described below, various measures have been taken by the government to support the revitalization of EBPs, and in addition to further and continuous inflow of funds from VCs and CVCs, the support measures at the time of start-up, etc., could be made on par with those of successful US EBPs in the past, or even just by attracting angel investors, which could secure funds for social implementation of valuable research results. If only the EBPs could attract angel investors, they would be able to secure funding for the social implementation of their valuable research results, speed up the development process, and increase the presence of domestic EBPs.

4-2. Strengths of Japan from Domestic EBP Pipeline

Looking at the development pipeline of EBPs in Japan, the largest number of EBPs are in oncology, followed by central nervous system and sensory nervous system, and the number of EBPs in the neurology field, which includes both central nervous system and sensory organs, is larger than that in the oncology field.

Small molecule and cell therapy products are the modalities with the highest percentage of EBPs in Japan. In the field of cell therapy, Japan has a leading position in iPS research, and the development of therapeutic drugs and regenerative medicine products is flourishing, with many domestic EBPs working hard to implement these products. However, the United States and China are catching up rapidly in this field as ^well16), and it is hoped that additional funds will be invested to accelerate development.

As for small molecules, more than half of the total pipeline, even for EBPs, consisted of small molecules. Of these, 56% were EBP items established by people from pharmaceutical companies, while 40% were EBP items by people from non-pharmaceutical backgrounds, and furthermore, about 70% of these were NMEs. Initially, we expected that most of the non-pharmaceutical small molecule items were repositionings, but most of them were NME items. ⁽ Okuyama ¹⁷⁾ showed that U.S. start-ups are capable of creating new small molecule drugs. He attributed this to the fact that many medicinal chemists lost their jobs at major companies after the 2000s due to mergers and acquisitions of pharmaceutical companies and changes in the trend from small molecules to biopharmaceuticals, and these people have moved to start-ups. The reasons for this are as follows: many medically qualified chemists have lost their jobs at major companies since the 2000s due to mergers and acquisitions of pharmaceutical companies and the shift from small molecule to biopharmaceuticals; small molecule drug discovery itself is becoming less dependent on the skill level of chemists due to the development of in silico technology; and the characteristics of improved new drugs created by start-ups are that they tend to emphasize drug differentiation rather than speed of market launch. The report also noted that the small molecule products of domestic EBPs are also being developed. Such a trend may also be true for small molecule products of domestic EBPs.

Small molecule drugs have always been a modality in which Japanese pharmaceutical companies excelled, and in the current pipeline, it is a modality that many Japanese companies, not limited to EBPs, are ^{developing16, 18)}, and deals in the non-clinical stage are also ^active19). As mentioned earlier, it is also a modality that is being actively promoted in domestic EBPs. Small molecules are said to be highly mature and commoditized as a modality, but they have a high affinity with the central nervous system due to their low initial synthesis cost, oral availability, and ability to control the central nervous system (CNS) migration. It is said to be one of the main drug discovery modalities for some time to ^come20). In addition, it is a modality that is still undergoing technological progress, such as the development of highly convenient small molecules using reverse translation after the efficacy of a highly specific macromolecule has been confirmed in humans, or the emergence of new drug discovery methods that take full advantage of its high affinity with AI drug ^discovery21 ). In the past, small molecules have also been important in drug discovery.

The Office of Pharmaceutical Industry Research In the past, the importance of small molecules has also been discussed in the "Journal of the American Society for Drug Discovery and Development (JSID). In the U.S., about half of all modality drugs are still small molecules, and the origin of these drugs is still accounted for by institutions that have been in business since 1990 or have been in operation for less than 30 years since approval, and this ratio has been increasing with each survey year, indicating that venture-originated small molecules and large companies are coexisting and prospering together in the U.S. We also reported that the number of preclinical stage small molecule drug studies has not declined in the U.S. HQ Company, indicating that small molecule drugs are supporting the maintenance of the total number of drugs in the U.S., and that startup companies are playing a major role in the creation of such small molecule ^drugs5). ^Takahashi22) also mentioned the possibility that the substitution of biopharmaceutical functions with smaller molecules will become a trend in drug discovery research in the future, regarding calcium-gene-related peptide (CGRP) inhibitors and drugs for spinal muscular atrophy (SMA). He mentions the possibility that the substitution of biopharmaceutical functions with smaller molecules will become a trend in drug discovery research in the future. In addition, ^Watanabe23) discusses the possibility of utilizing the know-how cultivated in small molecule drug discovery for macrocyclic macrolides, nucleic acid drugs, and natural product drugs, which are classified as mid-sized molecules with molecular weights of approximately 1000-15,000. It is possible for Japan to create epoch-making new drugs by redeveloping its existing strength in low-molecular drug discovery with new technologies.

5. Conclusion

At the Drug Discovery Ecosystem Summit in July 2024, then Prime Minister Kishida declared that Japan would become a "land of drug discovery" that could contribute to the people of the world and that the government would commit itself to this ^policy24). The government held a meeting inviting domestic and foreign pharmaceutical companies and research institutes, and set a goal of doubling private investment in drug discovery startups by 2028, and of producing at least 10 drug discovery startups with an enterprise value of 10 billion yen or more.

In response, a public-private council was established and the first "Public-Private Council for Enhancing Drug Discovery Capability" (June 2025) ²⁵⁾ was held to discuss the development of drug discovery clusters and strengthening of manufacturing bases, and to establish a framework to promote institutional improvement and strengthen governance in the public and private sectors. In addition, the "Basic Policies for Economic and Fiscal Management and Reform 2025" (Kottai Seisaku Shisaku), ²⁶⁾ emphasizes the development of a drug discovery ecosystem, promotion of innovation, and appropriate valuation in terms of NHI prices. Furthermore, as part of the expansion of support measures for drug discovery ventures, the policy also calls for increased support by AMED that transcends the boundaries of government ministries and agencies.

These factors have created an unprecedented momentum for industry, academia, and government to work together to make Japan once again a drug-discovery superpower, especially in terms of funding. In order to take advantage of this momentum, we hope that the challenges currently faced by domestic EBP will be overcome and that a system will be established to deliver innovative new drugs from Japan to the world as soon as possible by promptly establishing areas and modalities in which Japan can take advantage of its strengths.

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