Pharmaceutical Industry at a Glance Importance of Geographic Concentration in Drug Discovery
-The importance of geographic concentration in drug discovery -Comparison of drug discovery originators and drug discovery support environments across metropolitan areas

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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 order to continuously create drugs that address the diversity of diseases and unmet medical needs, it is essential to continuously create innovations by constantly introducing innovative technologies and new ^concepts1) and to go through a multi-step process before a drug is implemented in ^society2). 2 ⁾ In addition, drug discovery support by various contract research organizations and contract manufacturing organizations that meet the quality standards required for pharmaceuticals is also important to support this series of ^{processes3, 4)}. The drug discovery process is extremely long-term and highly complex, and there is a constant need to improve efficiency in line with the times.

Geographic proximity and concentration are known to play an important role in creating innovation and improving R&D ^efficiency5), and the same has been pointed out for drug ^{discovery6-8)}. The geographic proximity of academic institutions, emerging biopharma (EBP), and JPMA companies promotes knowledge spillover and accelerates interdisciplinary collaboration. This is expected to reduce the cost of information exchange and increase efficiency in the drug discovery process by increasing opportunities for incidental exchanges and collaborative research. In addition, the concentration of highly specialized human resources and venture capital in clustered areas will stimulate deals and create an R&D ecosystem. Therefore, geography is an essential factor in the creation of innovative drugs. Furthermore, the presence of a Contract Development andManufacturing Organization (CDMO) in that location accelerates the virtuous circle of the ^ecosystem4).

The Office of Pharmaceutical Industry Research has conducted a survey by country of patent applications for approved products and an analysis of the number of products under development, and reported a comparison of drug discovery capabilities by ^country9-11). However, when discussing the importance of concentration by geographical proximity, a survey at the narrower metropolitan area level is more effective than at the country level. One such metropolitan area-level study is the 2019 Life Sciences Drug Discovery Startup Ecosystem Rankings by ^{City12) by} Startup Genomics, a U.S. research firm. In this study, shared resources located within a radius of approximately 100 km from a central point in a given region (with some exceptions based on local conditions) were used as a metropolitan area aggregate to measure the level of biotech venture activity. The ranking was based on a composite score of funding, human resources, infrastructure, policies, etc. San Francisco and Boston were ranked first and second, respectively, while Chinese metropolitan areas such as Shanghai (9th) and Beijing (11th) were ranked in the East Asia region. On the other hand, Japanese cities such as Tokyo and Osaka did not make the top 20.

This survey by Startup Genome is very useful from the perspective of the drug discovery ecosystem centered on EBPs, given the current situation in which EBP-derived products account for a large number of development items. On the other hand, the survey did not take into account indicators such as the number of products developed by all drug discovery organizations in the metropolitan area, including pharmaceutical companies, or the existence of drug discovery support organizations. ⁽ Existing large or medium-sized pharmaceutical companies themselves have not abandoned drug discovery research ^{altogether13-15)}. Many drugs originated by pharmaceutical and chemical companies have been implemented in society and continue to be developed. In EBPs, the goal is to commercialize products discovered by the company itself through partnerships, out-licensing, and ^{acquisitions14, 16),} In many cases, pharmaceutical companies do not develop their own products, but rather partner or out-license them.

We believe that it would be meaningful to evaluate the drug discovery ecosystem in each metropolitan area not only in terms of EBPs as start-ups, but also in terms of all players involved in drug discovery, to create an evaluation index of drug discovery capabilities in major global clusters (metropolitan areas), and to visualize the drug discovery ecosystem in the overall picture, including the activities of pharmaceutical companies. We thought it would also be meaningful to create an index to evaluate the drug discovery capabilities of the world's major metropolitan areas and to visualize the drug discovery ecosystem in the overall picture, including the activities of pharmaceutical companies. For this purpose, it is necessary to compare drug discovery ecosystems among metropolitan areas. This requires a wide range of input and output indicators, including research strength, human resources, industrial activity, capital, clinical trial capacity, infrastructure support, regulatory systems and market access, as well as population and economic activity ^{indicators17)}. However, it is difficult to collect them all.

Therefore, as a starting point, this paper focuses on counting the number of originator companies that have found products, the number of products they have developed, the number of CDMOs located in that city, the number of deals involving organizations located in that city, and the number of pharmaceutical company headquarters and research centers in each major city in major drug-producing countries. We collected data on which to base our ecosystem assessment and identified the characteristics of each city.

Survey Methodology

2-1. Extraction of Originator Firms and Institutions

Drug discovery-related products, both clinical and non-clinical, were extracted based on Evaluate ^{PharmaⓇ (} as of November 2025), and the originator companies and institutions for each product were collected. The originator was defined by Evaluate ^PharmaⓇ as the company/institution that first discovered/invented the active ingredient of the compound for each product. The originator is the name and location of the originator at the time of discovery or invention.

2-2. Originator Company/Institution Classification

The originator companies and institutions were classified into the following five categories.

2-3. metropolitan area

The metropolitan area was based on the 2019 city-by-city drug discovery startup ecosystem ^ranking12) in the life science field by Startup Genome, a U.S. research firm. The metropolitan areas were defined as a set of metropolitan areas of shared resources located within a radius of approximately 100 km (with some exceptions based on local conditions) of a central point (city) in a particular region. Urban areas were surveyed at The Office of Pharmaceutical Industry Research.

For the selection of metropolitan areas, the top 9 nationalities of the originator companies and institutions selected in chapter 2-1 were selected, and the top 5 metropolitan areas in each country, and the number of companies and institutions in each metropolitan area over 100, were selected. The metropolitan area to which the pharmaceutical companies belonged was defined as the location of their headquarters.

Number of Development Items

For the number of development items, products were selected in the clinical stages owned by the originator companies and institutions selected above, and categorized by Phase and by company or institution.

Number of deals

The number of deals counted alliances and acquisitions made between January 2020 and November 2025 by companies and institutions worldwide extracted from Evaluate's Evaluate ^{PharmaⓇ (} as of November 2025), and the originators that served as licensors were counted. Alliances and acquisitions projects include "in-licensing," "acquisitions," "joint ventures," "product in-licensing," and "co-development of in-house candidate substances with external parties, combination of in-house licensed products with licensed products from other companies, etc."

2-6. number of research sites of pharmaceutical companies 2-7. number of CDMO sites

The number of research sites of pharmaceutical companies is calculated based on the number of companies listed in Evaluate ^PharmaⓇ that are flagged as "pharmaceutical companies" in the originator company/institution classification in Chapter 2-2, and that are originators of New Molecular Entity under development. Of the companies listed in the New Molecular Entity® , we collected information on 123 companies that were flagged as "pharmaceutical companies" in the originator company/institution classification in Chapter 2-2 and had research center information on their websites.

Number of CDMOs

The number of CDMO sites was calculated by extracting CDMO site information from Evaluate's CDMO ^{IntelligenceⓇ(} as of November 2025) and collecting the number of manufacturing sites in the cities of interest. Development Phase Focus" flag, preclinical and clinical sites were collected as contract manufacturing sites for developmental products.

2-8. number of drugs with new active ingredients

The number of New Molecular Entity (NME) was counted as the first NME approved in any country in 2020-2024 from Evaluate ^{PharmaⓇ (} as of November 2025).

All information collected above was supplemented and supplemented at The Office of Pharmaceutical Industry Researchbefore being used as data for this paper.

Results

3-1. originator company/organization metropolitan area

Of the originators with drug discovery themes at the time of the survey, 14,888 companies and institutions were available for survey. By nationality, the United States had the largest number of originators, followed by China, the United Kingdom, South Korea, and Canada, with Japan in sixth place, followed by France, Germany, Switzerland, and other European countries (Figure 1). The top 9 countries in terms of number of companies were selected from these countries, and the top 5 cities in each country were selected as metropolitan areas, with each city having at least 100 companies and a 100-kilometer radius from the central city. The selected metropolitan areas are: San Diego, San Francisco, New York, Philadelphia, and Boston from the U.S.; Guangzhou, Shanghai, and Beijing from China; London from the U.K.; Seoul from Korea; Toronto, Vancouver, and Montreal from Canada; Osaka and Tokyo from Japan; Paris from France; Munich from Germany; and Geneva from Switzerland. from China, Guangzhou from China, Shanghai from China, Beijing from China, London from the UK, Seoul from Korea, Toronto, Vancouver, and Montreal from Canada, Osaka and Tokyo from Japan, Paris from France, Geneva and Basel from Switzerland. The number of companies and institutions located in the selected metropolitan areas was 6,922, or 37.5% of all companies and institutions surveyed.

Number of originators and originator classification by metropolitan area

For the selected metropolitan areas, the number of companies and institutions originating drug discovery products and the originator company/institution classification were counted (Figure 2). Pharmaceutical companies accounted for only 7% of the total, while EBPs accounted for 86% of the total. Academia accounted for 3%.

Next, we counted by city classification. (Figure 3, top). Boston had the largest number of originator companies and institutions, followed by San Francisco, New York, San Diego, and other U.S. metropolitan areas, with London coming in fifth. Tokyo and Osaka were 9th and 17th, respectively. Boston had the highest concentration of originators, accounting for 7.8% of all originator firms and institutions.

Next, we looked at the percentage of originator firms and institutions by category (Figure 3). The highest percentage of pharmaceutical companies was in Osaka, followed by Tokyo, the two largest metropolitan areas in Japan, with more than 35% of the total. Seoul, Paris, and New York followed in that order.

Conversely, the highest EBP percentages were in the Chinese metropolitan areas, San Francisco, San Diego, Boston, and London. Only EBP was extracted from Figure 3 to see the EBP ratio (Figure 3, bottom). San Francisco had the highest EBP ratio at 93%, followed by San Diego, Boston, Shanghai, Guangzhou, and London at 91%, 91%, 90%, 90%, and 87%, respectively.

Next, each company and institution was extracted from Figure 3 and sorted in descending order (Figure 4). Tokyo had the highest number of pharmaceutical company headquarters, followed by New York and Seoul. Among EBPs, the majority of companies were established after 2010, and Shanghai was the third largest city in terms of the number of EBPs established after 2010. Tokyo was fourth in the number of academia institutions, followed by New York, Boston, and London. Geneva, Shanghai, and Vancouver had fewer.

3-3. number of products developed by metropolitan area (categorized by originator) 3-4. number of deals

In this chapter, the number of development items (Phase 1-Phase 3) created by the originator companies and institutions surveyed in the previous chapter (3-2) is investigated. The total number of products developed in the survey phase was 19,688. Of these, 10,447 items, or 53.0% of the total, were created by companies and institutions belonging to the metropolitan areas selected in the previous section 3-1.

The 10,447 items were classified by company/institution, and the most common type was EBP-derived products established in 2010 or later, accounting for 36% of the total. All EBP-derived products since 1990 accounted for 64% of the total, and 2/3 of all originators of developed products were EBP-derived (Figure 5).

Figure 5 shows that the U.S. metropolitan areas of New York, Boston, and San Francisco were in the top three in terms of the number of products developed, followed by Shanghai, London, and Seoul. Tokyo and Osaka ranked 8th and 14th, respectively. New York City, which had the largest number of developed items, accounted for 7.1% of the total number of developed items (Figure 6, top).

Next, in terms of the percentage of products categorized by company/institution, the largest number of products originated from pharmaceutical companies were found in Tokyo, Osaka, Basel, New York, and Paris, in descending order of the percentage of pharmaceutical companies, from left to right. On the other hand, EBPs accounted for a larger share in the Chinese metropolitan areas of Guangzhou and Shanghai, as well as in the Canadian metropolitan areas, San Francisco, and Boston (Figure 6, bottom).

Next, the data were extracted from the top of Figure 6 by each company and institution and sorted in descending order (Figure 7). The number of items originated by pharmaceutical companies was in the order of New York, Tokyo, Seoul, Basel, and London from the top (Figure 7, top). In both Tokyo and Paris, about 50% of sales were from large companies, with the remainder coming from medium-sized firms. In Seoul, the majority of products originated from small firms with sales of less than $1 billion. The classification of "large," "medium," and "small" in this analysis is based on annual global sales in FY2024, and is defined as more than $5 billion, $1-5 billion, and less than $1 billion, respectively.

The top EBP-derived products were those originating from metropolitan areas with a large number of EBPs, such as Boston, San Francisco, Shanghai, and San Diego (Figure 7 middle). Shanghai also had the highest number of EBPs established since 2010. New York, London, and Seoul also had a large number of EBP-derived products, while Basel, Tokyo, and Seoul had the largest number of EBP-derived products. On the other hand, Basel, Tokyo, and Paris had fewer EBP-derived items.

The metropolitan area with the largest number of current developments originated by academia was New York, followed by San Francisco, London, and Boston (Figure 7, bottom). In New York, in addition to universities, many products originated from hospitals and non-profit research institutes. In Japan, Osaka and Tokyo were the 7th and 9th largest metropolitan areas, respectively. Osaka was dominated by items originating from Osaka University, while Tokyo was dominated by items originating from RIKEN.

3-4. number of deals

As mentioned in Chapter 1, the horizontal division of labor has become the mainstream in the drug discovery process in recent years. For items derived from academia or bio-ventures derived from academia, collaboration through the horizontal division of labor is essential, and many partnerships and acquisitions, such as licensing and licensing out of assets, are being implemented. Even if a pharmaceutical company is the originator, the drug discovery process involves a long period of research and development, during which the portfolio itself changes according to the situation. . Therefore, this chapter compares the number of items owned by originator firms and institutions that have conducted an out-licensing deal with respect to the metropolitan area to which they belong.

We looked at the total number of deals by development stage for products derived from originator companies and institutions in 2020-2025 (Figure 8). The total number of deals was 8,356. The number of deals originated from originators in the U.S. metropolitan areas of Boston, New York, and San Francisco ranked first, second, and fifth, respectively. Tokyo ranked fourth in terms of the total number of deals and was the most active in terms of out-licensing deals. By phase, Boston had the most preclinical out-licensing deals, while Tokyo-derived deals were mostly in the clinical phase, especially Phase 1. Boston had the largest number of non-clinical stage deals, while Tokyo was sixth.

Figure 8 is sorted in descending order by originator company/institution (Figure 9). The majority of deals in Shanghai and Boston were EBP-derived products established after 2010. In contrast, New York, Tokyo, Osaka, Basel, and Paris had more deals for pharmaceutical-derived products. Seoul was active in out-licensing deals for both pharmaceuticals and EBPs.

We looked at whether deals were international or domestic (Figure 10). International deals are those where the nationality of the out-licensing party and the out-licensed party are different, while domestic deals are those where the nationality of the out-licensing party and the out-licensed party are the same. The results were sorted in order of the number of international deals, with Tokyo at the top, followed by Shanghai, Boston, and New York. On the other hand, the largest number of domestic deals were in metropolitan areas where EBPs are active, such as New York, Boston, San Francisco, San Diego, and Shanghai. As seen earlier, Seoul has a large number of out-licensing deals for both pharmaceutical- and EBP-derived products, suggesting that the city is actively out-licensing its own products to foreign countries.

3-5. number of research sites of pharmaceutical companies

The presence or absence of a research center of a pharmaceutical company is also considered to have a significant impact on the drug discovery ecosystem in terms of knowledge and technology accumulation, inducement of start-ups in terms of funding and know-how, and exchange of human resources. Therefore, in this chapter, we counted the number of research bases of pharmaceutical companies in each city, and furthermore, to see the degree of internationalization of the city, the number of research bases was aggregated and presented by the nationality of the headquarters (Figure 11). The counts are as the number of research sites, one site per count, regardless of the size of the site.

Boston had the largest number of research sites, followed by Tokyo, New York, London, and Shanghai. Looking at the nationalities of the pharmaceutical companies with research centers in each city, New York had the greatest variety with 12 countries, followed by Boston with 11 countries, and Shanghai with 9 countries. London also had 9 countries, but there were few research centers of its own companies, with the rest of Europe accounting for a little less than half, and the U.S. and Japan making up the remainder. Tokyo had six countries, but the majority were Japanese companies, and it could not be said that it contained pharmaceutical companies from very many countries. By country, Japan had many research centers outside of Tokyo and Osaka, including Boston and San Diego.

3-6. number of CDMOs

In drug development, the accumulation of clinical and non-clinical data as well as the development of technologies related to product manufacturing are important. In particular, with the diversification of modalities in recent years, collaboration with CDMOs is becoming increasingly important as an option for pharmaceutical companies other than in-house manufacturing and technology development. In the case of EBPs in particular, it is rare for companies to have their own in-house manufacturing facilities, and CDMOs with nearby offices are likely to be candidates for consideration as contractors with whom they can communicate more closely, especially on the technical side. In this chapter, we surveyed the number of CDMOs in each city (Figure 12).

The number of CDMOs located in the suburbs of Tokyo was 54, the second largest after San Francisco and London. Half of the Tokyo sites were capable of contract manufacturing of developed products. The number of CDMOs located near Osaka was 37, following Tokyo, San Diego, and Basel.

When looking at the CDMO locations in each city by nationality, the largest number of CDMO locations were generally located in the home country, and CDMO locations were often located in the home country. Boston was the city with the largest number of foreign offices.

Number of NMEs

For all NMEs first approved in any country in 2020-2024, originator companies and institutions were categorized (Figure 13). Of the total 320 NMEs, pharmaceutical companies were the originators for 51% of all NMEs.

Next, the above NMEs were classified by metropolitan area (Figure 14). The most common metropolitan area was New York, followed by Boston, Tokyo, and Shanghai. Looking at the breakdown of originators, a large percentage of originators were from pharmaceutical companies in New York, Tokyo, Basel, Osaka, and Paris, while a large percentage were from EBPs in the Chinese metropolitan areas, Boston, San Francisco, and San Diego.

Summary and Discussion

In this report, in order to help estimate the drug discovery potential of the world's major metropolitan areas, we focus on the number of pharmaceutical-related companies and institutions that have drug discovery-related R&D products, and among them, the originator companies and institutions that found the products, and the number of research bases of pharmaceutical companies, The number of research sites of pharmaceutical companies, the number of development items, the number of deals, the number of CDMO sites as one of the indicators of drug discovery support, and the number of approved NMEs as the final output were counted by metropolitan area.

As a result, we found that each metropolitan area has its own characteristics, which may be broadly classified into three types: pharmaceutical company-led, EBP-led, and comprehensive, where both types are active.

Typical examples of pharmaceutical company-led metropolitan areas were found in Japanese metropolitan areas such as Tokyo and Osaka. In addition to major pharmaceutical companies, there are many medium-sized pharmaceutical companies, and these companies are responsible for the development of a large number of products, and even approved products. In recent years, the products created by these pharmaceutical companies have been the target of active deals. Tokyo had the second highest number of products developed by pharmaceutical companies. On the other hand, both metropolitan areas have not seen much activity in EBPs, with Osaka having the fewest and Tokyo the eighth-lowest number of EBPs established since 2010, although the number of EBPs is high in proportion. In addition to the Japanese metropolitan areas, European metropolitan areas such as Paris and Basel are also considered to fall into this category. These metropolitan areas have megapharma headquarters, and although the number of pharmaceutical companies itself is not large, the number of products under development is large. As in Tokyo and Osaka, there were neither a large number of EBPs that served as originators nor a large number of products in their pipelines.

Typical of EBP-driven metropolitan areas, we found that in addition to Boston, San Francisco, and San Diego, which have long been well known for the rise and fall of EBPs, Shanghai has recently broken into one of these areas. The number of EBPs in these metropolitan areas is very large, and because of the large number of EBPs, the number of development items is also very large. The number of deals is also increasing, and the number of CDMOs supporting drug discovery is also high, suggesting that the startup ecosystem is rotating very effectively.

In addition, although there are few pharmaceutical company headquarters in these metropolitan areas, there are a large number of pharmaceutical company research centers, especially in Boston, Shanghai, and San Francisco. The variety of nationalities of the pharmaceutical companies with research bases in these cities can be seen as evidence of the progress of internationalization. Conversely, Tokyo, Osaka, and Seoul have many research centers, but most of them are homegrown companies, and may lag behind in terms of internationalization.

New York and London were the two most active integrated metropolitan areas, with active EBPs in addition to the headquarters and research centers of pharmaceutical manufacturers. Both metropolitan areas were home to the headquarters of megapharma and many other pharmaceutical manufacturers, and had the second largest number of EBPs after Boston and San Francisco. The large number of research centers and the variety of nationalities of the companies in both metropolitan areas suggests that internationalization is progressing in these areas as well. In addition, the number of CDMOs supporting drug discovery and the number of NMEs finally approved was high, suggesting that Seoul is an excellent metropolitan area in terms of overall quality.

Seoul appears to be a comprehensive metropolitan area when looking only at the number of companies and the number of products under development. It had a certain number of originator companies, originator items, and both pharmaceutical manufacturers and EBPs. Both were also active in out-licensing deals. Given these factors, they appeared to have established a unique position with drug discovery at the center of their business. In recent years, South Korea has made a national effort to revitalize its biotech industry, supporting not only emerging EBPs but also existing mid-sized pharmaceutical manufacturers, and we felt the need to closely monitor future developments.

Other cities with a limited concentration of pharmaceutical companies, such as Toronto, Vancouver, Montreal, Beijing, and Guangzhou, could be classified as EBP-led cities, while the European cities of Munich and Geneva have long had pharmaceutical companies and could be classified as pharmaceutical-led cities based on the products derived from these companies.

We analyzed the correlation between the number of products developed, the number of pharmaceutical companies, the number of EBPs, the number of academia, the number of deals, the number of research centers, the number of CDMO centers, and the number of NMEs created in the last 5 years. Focusing on the number of NMEs under development, only the number of pharmaceutical companies was not significant, but significant correlations were observed for the other parameters (Table 1).

Other cities that were not included in the survey but have many drug discovery themes (Seattle, Chicago, Durham, Los Angeles, Washington, DC, etc.), German cities with major pharmaceutical companies, and metropolitan areas such as Belgium and Denmark with medium-sized or larger pharmaceutical companies and their own drug discovery ecosystems were also included in the survey. In recent years, drug discovery has become a rapidly growing area of technological innovation and innovation.

In recent years, due to rapid technological innovation, globalization, and the increasing cost of drug discovery, the drug discovery industry has shifted from a vertically-integrated, all-in-one model in which major pharmaceutical companies were responsible for drug discovery to a horizontal division of labor model in which various players cooperate with each other and play their respective roles by leveraging their strengths. In Boston and San Francisco, the flourishing of EBPs has led to a successful drug discovery ecosystem cycle based on the horizontal division of ^labor18,19), which has been emulated around the world. However, even in the horizontal division of labor model, the cost structure associated with management and coordination has become more complex and does not necessarily lead to a reduction in overall ^costs20). This survey suggests that there may be three types of models in each metropolitan area, and that the key to improving drug discovery may be how to make the best use of these characteristics.

Although it was not conducted this time, it would be possible to rank all the cities using the various indicators obtained. Local rankings could also be created by scoring each of these indicators. The ultimate ranking of drug discovery ecosystems by city cannot, of course, be measured solely from the indicators surveyed in this study. In addition to these indicators, the number of drug discovery publications and citations, number of patents, research funding, number of PhDs and researchers, number of post-docs, number of employees, venture capital investment and public research grants, number of available clinical trial sites, regulatory affairs, manufacturing capacity, number of approvals, country systems, population and economic activity indicators, and so on, It will be necessary to calculate a wide range of input and output indicators, weight them, score them, and then rank them by standardizing them by population and area within the ^region17).

Concluding Remarks

Based on the ranking results of the various indicators, we divided the cities into several types and examined where they could be categorized. We hope that this will help to shed light on the characteristics of urban agglomeration, as well as on the direction Tokyo, Osaka, and other Japanese cities should take and the challenges they face.

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