Pharmaceutical Industry at a Glance Japan’s Prescription Drug Market from the Perspective of the Yen and the Dollar

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The Office of Pharmaceutical Industry Research Senior Researcher Daisuke Kanai
Principal Researcher Shinji Tsubakihara
Senior Researcher Ryusuke Nabeshima

Summary

1. Introduction

In recent years, the Japanese pharmaceutical market has been shrinking, and it is said that the appeal of development and investment in Japan is declining. Consequently, ^{it has been suggested} that pharmaceutical companies from various countries are becoming less willing to develop and invest in Japan, which could lead to risks of drug lag and loss in the Japanese market ^¹).Therefore, the objective of this study was to analyze and visualize the actual extent to which the Japanese pharmaceutical market is shrinking, using both Japanese yen (hereinafter “yen”) and U.S. dollars (hereinafter “dollars”).

In addition to sales trends, we supplemented the analysis and visualization by including the annual average percentage change (APC), ^the consumer price ^index²), trends in the rates of change for nominal and ^{real GDP³)}, and purchasing power parity (PPP) ^⁴).Furthermore, we adjusted the APC of domestic sales (hereinafter “Domestic Sales APC”) for inflation using the GDP deflator (hereinafter “Real Sales APC”) to eliminate the impact of price fluctuations and examine the actual changes.

Note that the analysis and visualization of the pharmaceutical market focus on sales of prescription drugs converted from yen to dollars, which are the subject of this survey; intellectual property-related revenues, revenues from partnerships and deals, service and contract manufacturing revenues, and financial and investment-related revenues are not included in sales.Consequently, domestic sales of pharmaceuticals introduced by Japanese companies from overseas firms are counted as sales by Japanese companies; conversely, overseas sales generated by Japanese companies through exports to overseas firms are not counted as sales by Japanese companies in the global market.

In the Japanese pharmaceutical market, measures implemented between 2010 and 2014 included ^{the introduction of the} “Add-on for Promoting New Drug Creation and Elimination of Off-Label ^{Use”⁵,the full-scale implementation of policies to promote generic drugs⁶}, and the strengthening of the application of “market expansion recalculation.”After 2015, the “Basic Policy for Fundamental Reform of the Drug Pricing ^System”⁷ was adopted in 2016 by the four relevant ministers. In light of these policies, the study period was set to cover the 15-year span from 2010 to 2024 and the 10-year span from 2015 to 2024.

Survey Methodology

Trends in global prescription drug sales (hereinafter “global sales”) from 2010 to 2024, expressed in U.S. dollars, and the share of Japanese prescription drug sales;the sales by country and number of companies by country for the top 100 companies in global sales (in U.S. dollars), and the sales by country and number of companies by country for the top 70 companies in domestic prescription drug sales (hereinafter referred to as “domestic sales”) (in U.S. dollars) were created using The Office of Pharmaceutical Industry Researchbased on the lists published in IQVIA World Review Analyst, IQVIA JPM, Data Period 2010–2024 (as of March 2026), and were compiled on .The metrics for the top 100 companies by global sales and the top 70 companies by domestic sales were derived from figures obtained from IQVIA World Review Analyst and IQVIA JPM, using the maximum values from a database updated annually at The Office of Pharmaceutical Industry Research.

In addition, trends in domestic prescription drug sales by headquarters country of origin for the periods 2010–2024 and 2015–2024, as well as trends in domestic prescription drug sales by headquarters country of origin for member companies of the Japan Pharmaceutical Manufacturers Association (hereinafter referred to as the JPMA) and APC data, were compiled on The Office of Pharmaceutical Industry Researchbased on IQVIA JPM, Data Period 2010–2024 (as of March 2026) and were created at .

APC was calculated by taking the natural logarithm of the figures for each fiscal year to derive a linear regression line, and then using the exponential value (exp(m)) of the coefficient (m) to compute 100 × ((exp(m) - 1)). APC values were rounded to the second decimal place.For reference, the sales APC was adjusted for real terms using the following formula based on the GDP deflator’s APC (≈ nominal GDP’s APC – real GDP’s APC):

Real Sales APC = Sales APC – GDP Deflator APC

Furthermore, JPM’s data on company nationalities was sourced from each company’s website and Evaluate ^Pharma® (as of May 2026), while the consumer price index (CPI) growth rate was compiled from e-Stat (Consumer Price Index), and the nominal and real GDP growth rates were compiled from the National Accounts (GDP Statistics).

IQVIA World Review Analyst uses average rates set quarterly and displays price levels at the factory-gate price level, while IQVIA JPM uses monthly average rates and displays price levels at the consumer price level.

Results

(1) Domestic Market

① 15-Year Trend in Domestic Prescription Drug Sales by Headquarters Country (in yen)

Figure 1 shows the trend in domestic sales in yen over a 15-year period (2010–2024) using a bar chart; the year-on-year change in the Consumer Price Index relative to 2010, as well as the growth rates of nominal and real GDP, are shown using line charts; and the domestic sales APC by parent company nationality is shown in the table on the right.

The domestic sales APC was 1.4% and increased gradually over the 15-year period. The domestic sales APC for Japanese companies was 0.7%, which was below the overall domestic sales APC.

Furthermore, the real APC for domestic sales was 0.6%, while that for Japanese companies was -0.2%; in terms of real APC, Japanese companies experienced negative growth.

Among the nationalities of the top domestic revenue-generating companies (hereinafter, “top companies by nationality”: in order of revenue, Japan, the United States, Switzerland, the United Kingdom, Germany, France, Belgium, and Denmark), only France had an APC for domestic revenue and a real APC for domestic revenue that were lower than those of Japan (APC for domestic revenue: -1.3%,real sales APC -2.1%).

② 10-Year Trend in Domestic Sales by Country of Headquarters, in Yen

Figure 2 shows the trend in domestic sales in yen over a 10-year period. By shortening the period from 15 years to 10 years, the figure is intended to reflect, through numerical data, the impact of ^policies⁷) and corporate activities since 2015.

The 10-year domestic sales APC was 0.9% and the real sales APC was -0.1%, representing lower rates of change compared to the 15-year domestic sales APC of 1.4% and real sales APC of 0.6% (Figure 1).This indicates that the domestic pharmaceutical market slowed even further over the 10-year period than it did over the 15-year period.

Furthermore, when looking solely at Japanese companies, the domestic sales APC was 0.1% and the real sales APC was -0.9%, which were lower than the 15-year figures for Japanese companies of 0.7% for domestic sales APC and -0.1% for real sales APC (Figure 1).This indicates that Japanese companies, which are supposed to be the driving force behind the domestic prescription drug market, faced even more challenging conditions over the most recent 10-year period.

French companies, which recorded a domestic sales APC of -1.3% over the 15-year period andand a real sales APC of -2.1% over the 15-year period; however, when viewed over the 10-year period, their domestic sales APC was 3.8% and their real sales APC was 2.8%, indicating a return to positive growth. Among the top domestic sales companies, Japanese-headquartered companies had the lowest domestic sales APC and real sales APC.

③ 15-Year Trend in Domestic Sales (in yen) by Headquarter Country for JPMA Member Companies

Figure 3 shows the trends in domestic sales (in yen) over the 15-year period, limited to ^{member companies of the JPMA⁸)} and categorized by the nationality of their headquarters.The JPMA is ^{an organization9)} comprising 68 R&D-oriented pharmaceutical companies (as of April 1, 2026); by limiting the analysis to JPMA member companies, the intention is to ensure that the environment for new drug discovery is accurately reflected in the figures.

The domestic sales APC for JPMA member companies was 0.9%, and the real sales APC was 0.1%, both of which were lower than the 15-year domestic sales APC of 1.4% and real sales APC of 0.6% shown in Figure 1, which includes non-JPMA member companies.Furthermore, among JPMA member companies, Japanese-owned firms recorded negative growth, with a domestic sales APC of -0.1% and a real sales APC of -0.9%. This represents a significant divergence from the 15-year domestic sales APC of 0.7% andand a real sales APC of -0.1% (which includes non-JPMA members), indicating that the Japanese market presents a more challenging business environment for Japanese-affiliated JPMA member companies.

④ 10-Year Trend in Domestic Sales (in yen) by Headquarter Country for JPMA Member Companies

Figure 4 shows the 10-year trend in domestic sales of JPMA member companies, expressed in yen.

The 10-year average annual growth rate (APC) for domestic sales of JPMA member companies was 0.7%, and the real sales APC was -0.3%, both of which were lower than the 15-year figures shown in Figure 3—an APC of 0.9% for domestic sales and an APC of 0.1% for real sales—which were limited to JPMA member companies.Furthermore, the APC for domestic sales of Japanese-affiliated member companies of the JPMA over the 10-year period was -0.5%,and the real sales APC was -1.5%, which was even lower than the 15-year figures for Japanese-affiliated member companies of the JPMA: a domestic sales APC of -0.1% and a real sales APC of -0.9%.

In the domestic market over the 10-year period, limited to JPMA member companies and measured in yen, while all foreign-affiliated member companies posted positive domestic sales APC and multinational member companies (excluding Switzerland) showed positive real sales APC, Japanese-affiliated JPMA member companies experienced notably negative growth.

For companies that have been in business “10 years rather than 15,” “JPMA members focused on research and development,” and “Japanese companies rather than foreign-owned companies,” the domestic market environment—as measured in yen—was more challenging, and some even experienced negative growth.

⑤ 15-Year Trend in Domestic Sales by Nationality for the Top 70 Companies (Converted to U.S. Dollars)

Figure 5 shows, in a bar chart, the domestic sales (in U.S. dollars) of the top 70 companies by country of origin, and, in a green line graph, their domestic sales in yen. The 70 companies were selected using the maximum values from the database updated at The Office of Pharmaceutical Industry Research(see Survey Methodology).Since precise figures for the share of the top 70 companies’ sales relative to total domestic sales in yen could not be obtained, we include the following reference value: in 2024, the domestic sales of the 68 member companies of the JPMA totaled approximately 9,673.0 billion yen, accounting for 84.1% of the total domestic market of approximately 11,504.0 billion yen.

Domestic sales in yen showed a gradual upward trend over the 15-year period (see the green line graph).On the other hand, when viewed in U.S. dollar terms, the trend in domestic sales of the top 70 companies by nationality has been on a sustained downward trajectory since 2011; the decline has been particularly pronounced in recent years, showing a clear divergence from the yen-denominated trend described above, even though both reflect the same Japanese market.Furthermore, the recent downward trend has been linked to the rapid depreciation of the yen beginning in 2021.

⑥ 15-Year Trend in the Number of Companies by Country of Origin Among the Top 70 Domestic Sales Companies (Converted to U.S. Dollars)

Over the 15-year period, the number of companies by nationality among the top 70 domestic pharmaceutical companies in terms of U.S. dollar-denominated sales showed some fluctuations due to mergers and ^{the turnover of} old and new ^{companies¹⁰)}, but there were no significant increases or decreases over the 15-year period (Figure 6).Looking at the domestic ethical pharmaceuticals market over the 15-year period—which showed a gradual upward trend in yen terms but a downward trend in dollar terms—no new Japanese companies entered the top 70 by sales, nor did the number of foreign companies in the top 70 increase; thus, from the perspective of the number of companies at the top of the domestic pharmaceutical market, the market structure remained rigid.

(2) Global Market

① Trends in Global Sales by Nationality for the Top 100 Companies (Converted to U.S. Dollars) Over 15 Years

Over the 15-year period, the total sales of the top 100 companies by global sales (in U.S. dollar terms) continued to increase (Figure 7). The top 100 companies were selected using the maximum values from the database updated at The Office of Pharmaceutical Industry Research(see Survey Methodology).

In line with the growth of the global market, companies based in the United States, Switzerland, the United Kingdom, Germany, and Denmark—which account for a large share of global sales—have continued to increase their global sales, with this upward trend becoming particularly pronounced in recent years.On the other hand, the revenue of Japanese companies ranked among the top 100 global companies by revenue (in U.S. dollar terms) has been on a downward trend since 2022, and in 2023, they were overtaken by Danish companies, dropping to 6th place.Furthermore, the 2024 revenue of Japanese companies—approximately $69 billion—was at the same level as in 2010, 15 years prior; while companies from the top revenue-generating countries continued to grow their revenue in the global market, the stagnation of Japanese companies was particularly pronounced.

Figure 7 also shows the yen-dollar PPP rate. Over the 15-year period, the PPP rate shifted significantly in the direction of a stronger yen, indicating a decline in profitability when measured in yen.

② 15-Year Trend in the Number of Companies by Country of Origin Among the Top 100 Global Companies by Sales (Converted to U.S. Dollars)

Figure 8 shows the trend in the number of companies by nationality among the top 100 global companies by revenue, converted to U.S. dollars, over the 15-year period.

Among the top 100 companies by global sales (in dollar terms) over the 15-year period, the number of U.S.-based companies—which accounted for the highest sales—fluctuated between 22 and 30 companies over the 15 years, with 26 companies in 2023 and 27 in 2024, indicating an upward trend in recent years.

The number of Indian companies showed a clear upward trend. The number of companies from other countries fluctuated by about one or two. The number of Japanese companies showed a trend distinctly different from that of other countries, continuing to decline from 20 companies in 2010 to 8 companies in 2024—a 60 percent decrease over the 15-year period.

4. Summary and Discussion

In Section 3(1), it was noted that while the domestic prescription drug market, viewed in yen terms over 15- and 10-year periods, has shown a gradual upward trend, the growth of Japanese-based companies has been minimal compared to that of foreign-based companies; furthermore, member companies of the JPMA have experienced negative growth.In addition, it was noted that, when measured in U.S. dollars, the domestic prescription drug market has been contracting, and this trend has intensified in recent years.

Amid this stagnant growth in the Japanese market, an analysis of changes in the number of the top 70 companies by sales (in yen) by nationality reveals that, while there have been some fluctuations due to mergers and the turnover of old and new companies, the number of companies from each country has remained virtually unchanged over the past 15 years.There has been no corporate renewal, such as the emergence of multiple new Japanese companies or the entry of foreign companies; instead, the domestic market—which continues to show a gradual increase in yen terms but a clear contraction in dollar terms—has continued to be shared among companies of the same nationalities and in the same numbers.

In recent years, Japanese pharmaceutical companies ^{have been} actively pursuing overseas investments, primarily in the United States¹¹ ⁾.In particular, responding to the U.S. Trump administration’s tariff policies and Most Favored Nation (MFN) policies ^{is expected} to be the most pressing issue for the pharmaceutical industry in the near ^{term¹², andsome} Japanese companies have announced management decisions to accelerate investment in the U.S., partly in response to highly uncertain market ^{forecasts¹³)}.While corporate strategies are expected to be agile given the highly fluid nature of Trump’s tariff policies and MFN policies, the increase in overseas investment—particularly in the United States— ^will naturally ^heighten the impact of foreign currency earnings (especially U.S. dollars) on corporate profits¹⁴ ⁾,therefore, the need to closely monitor corporate earnings in dollar terms in both domestic and international pharmaceutical markets is growing.

Furthermore, for both Japanese and foreign companies ^, pharmaceutical prices subject to MFN treatment ^are a major factor influencing their business decisions¹⁵ ⁾.Therefore, if the Japanese pharmaceutical market—already on a downward trend in dollar terms over the 15-year period from 2010 to 2024—continues to shrink further, it is undeniable that foreign pharmaceutical companies may become reluctant to invest in Japan.Furthermore, if investment in Japan wanes, it could lead to problems with access to pharmaceuticals ^— as has been discussed in recent years ^— where innovative drugs used overseas do not reach Japanese ^{patients¹⁶)}; and if the current environment of yen weakness persists, it poses the risk that international prices for new drugs in the Japanese market will fall relative to other currencies, increasing the likelihood of MFN application.In fact, looking at the yen-dollar PPP (Figure 7), the reality is that profitability in yen terms is already on a steady downward trajectory, and it goes without saying that this has a significant impact on pharmaceuticals.

As mentioned above, the Japanese pharmaceutical market is experiencing a gradual increase in yen terms but a contraction when converted to dollars; if sales are growing significantly overseas, this means that Japanese pharmaceutical companies are increasing the overseas share of their revenue structure and pushing forward with business expansion in the global market.However, as mentioned in Section 3(2), among the top 100 companies contributing to global pharmaceutical sales, Japanese companies have been unable to increase their sales, and the number of such companies has declined significantly. In terms of the number of companies in the Japanese market, both Japanese and foreign companies have remained at roughly the same level for the past 15 years.Looking specifically at Japanese companies, their numbers are declining in the global market—which continues to grow in dollar terms—while remaining unchanged in the Japanese market, which continues to shrink. To transform Japan’s pharmaceutical industry into a growth industry, structural changes that help break free from low growth will likely be required.

Currently, under Japan’s Growth Strategy, investments in drug discovery and biotechnology ^{are being} considered and ^{implemented¹⁷)}. There are likely to be a wide range of investment strategies aimed at promoting growth.In this news report, we examined the global and Japanese pharmaceutical markets from both yen and dollar perspectives to gather key facts. Furthermore, by presenting market trends based on exchange rates alongside fluctuations in price indices and GDP figures, we analyzed and visualized whether the market is correlated with these indicators or not.

On the other hand, this news report does not address “factors causing the domestic pharmaceutical market (in dollar terms) to shrink” other than exchange rates and inflation, “reasons why there has been no turnover in the number of companies from various countries among the top-selling firms in the domestic pharmaceutical market,” or “reasons why global sales (in dollar terms) by Japanese companies are declining.”, “the factors causing Japanese companies to lose market share globally and see a marked decline in their representation among the top-selling companies,” and so on. Since the report does not present detailed survey results, I will not delve deeply into these issues; however, at least with regard to the contraction of the domestic pharmaceutical market, ^{it goes without saying} that Japan’s unique drug pricing system plays a significant role¹ ⁾.Furthermore, numerous sources confirm ^{thatpolicies promoting} generic drugs ^⁶) and regulations other than the drug pricing system ^are also major factors contributing to the aforementioned contraction of the Japanese market and the slump of Japanese companies overseas¹⁸ ⁾.

In order for the pharmaceutical industry to become a growth industry that drives Japan’s economy, and to reliably deliver innovative medicines to patients—which is the industry’s primary mission—it is strongly hoped that public-private collaboration, including policies and investments, will be carried out even more efficiently.

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