Additional InformationDetailed analysis of four pharmaceutical markets that present immense potential for pharmaceutical manufacturers. China and Japan will be the largest and second largest pharmaceutical markets in the Asia Pacific region covered by Espicom in 2016.
Diverse markets, diverse opportunities
Geographically located in North East Asia, these four countries are currently undergoing different phases of development, both in overall terms and, more pertinently, in the growth of their respective pharmaceutical markets.
Japan, South Korea and Taiwan represent highly developed pharmaceutical markets with advanced healthcare systems and high levels of spending, both in the private and public sectors. This has inevitably placed a strain on their respective governments, which have in recent years tried to temper escalating spending by introducing various cost-containment strategies, including periodical changes to reimbursement prices and the encouragement of generic substitution.
Despite these measures, spending has continued to rise. Key factors are the ageing population and the high healthcare standards that the population has grown to expect. While governments hope to control healthcare costs, the trend suggests health spending will continue to rise in the long run.
China's big opportunity
China's healthcare provision is somewhat lacking when compared to the other three countries, but it remains one of the fastest growing pharmaceutical markets in the world, in tandem with the country’s rapid economic expansion. The influx of foreign multinationals has offered continued investment, and production plants and R&D facilities are being expanded all the time. Improvements in regulatory practices are making the ability to sell imported products quicker and easier, while the lowering of tariffs on imported goods and an increase in transparency of legislation has made a notoriously hard-to-penetrate market a more attractive proposition for overseas companies. These are positive moves, but concerns remain in key areas such as IP protection.
Highlights from the region
The Ministry of Health (MoH) has made lowering drug prices a top priority for health authorities in 2011. The National Development and Reform Commission (NDRC) implemented two rounds of drug price reductions in 2011, one in March and the other in September. Most of the drugs reduced were manufactured by multinationals, which had previously not been subject to pricing controls. In July 2011, the MoH revealed that it may introduce mandatory licensing policy to secure cheaper drugs for HIV/AIDS patients, as part of the country’s universal health coverage programme. In January 2011, the MoH announced that the Essential Drugs List would be further expanded to cover nearly all government-sponsored grass-roots health institutions.
Takeda is the largest Japanese pharmaceutical manufacturer in terms of sales, and has been by a considerable margin for some time. Other leading domestic producers include Astellas, Daiichi Sankyo and Eisai. Over the past five years, the fastest growing pharmaceutical companies have been Mitsubishi Tanabe Pharma, Dainippon Sumitomo Pharma, Kyowa Hakko Kirin Company, Shionogi & Co Ltd. and Otsuka. The leading foreign pharmaceutical companies in terms of sales in Japan are Pfizer, Roche and Novartis. A number of multinational companies are actively seeking to expand their operations in Japan, notably Pfizer, GlaxoSmithKline, Novartis and Bristol-Myers Squibb.
The implementation of the EU-Korea Free Trade Agreement (FTA) will provide EU companies with better access to the South Korean pharmaceutical market by paving the way for elimination of tariffs on EU pharmaceutical exports to the country. The volume and value of EU pharmaceutical exports are expected to increase with the implementation of EU-Korea FTA, posing a potential threat to US pharmaceutical exporters. The EU-Korea FTA also stipulates that South Korean authorities will be required to align their practices with international standards through an improved regulatory environment. In particular, the EU-Korea FTA will aim to ensure the strengthening of transparency in drug pricing decisions.
IPR is improving, although there still remain concerns over patent linkage and the data protection of pharmaceuticals in Taiwan. In January 2009, the USTR removed Taiwan from its Special 301 Watch List of countries. However, in the USTR’s latest Special 301 Report for 2011, the USA remains concerned with the policies of Taiwan, on issues related to innovation in the pharmaceutical sector and other aspects of healthcare goods and services. Attempts are being made to improve the compatibility of Taiwanese IP with other countries, and Taiwan has signed an IP agreement with China that means that IP is recognised as valid in both countries, even if it is filed only in one.
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