In recent years, the Japanese pharmaceutical industry has been one of the most active in terms of M&A activity. In order to cope with a shrinking domestic workforce, rising new pharmaceuticals development costs, and the rise of generic pharmaceuticals, companies are expected to become even more active in M&A activities in the future.
Trends in the Japanese Pharmaceutical Industry
Soaring New Generic Pharmaceuticals Development Costs and the Rise of Generic generic pharmaceuticals Putting Pressure on Profits
In recent years, soaring new pharmaceuticals development costs and the rise of generic pharmaceuticals have put pressure on profits, discouraging companies from taking risks in new pharmaceuticals development. Rather than taking such risks, companies tend to try to limit costs and risks by acquiring human resources and facilities from other companies through M&A.
Decreasing Workforce Causes Management Instability
The recent decrease in Japan’s working population has caused business instability, especially for small- and medium-sized companies, and more companies are choosing to continue stable research and development by becoming part of a major enterprise.
Examples of M&A in the Pharmaceutical Industry in Japan
M&A of VISTERRA INC. by Otsuka Pharmaceutical
Execution date: August 2018
Purpose: Development of new pharmaceuticals and acquisition of antibody pharmaceuticals pipeline
URL: https://www.otsuka.co.jp/company/newsreleases/2018/20180711_1.html
M&A of Idorsia Ltd. by Sosei Group
Execution date: July 2023
Objective: To strengthen global marketing
URL: https://ssl4.eir-parts.net/doc/4565/tdnet/2313713/00.pdf
M&A of Medi-Tate by Olympus
Execution date: May 2021
Objective: Expand product lineup and strengthen therapeutic device business in the urology field
URL: https://www.olympus.co.jp/news/2021/nr02139.html
Issues and Opportunities Facing Japan’s Pharmaceutical Industry
Issues to be faced in the coming years
The Japanese pharmaceutical industry faces multiple challenges, including a strict regulatory environment, rising R&D costs, and a shrinking domestic market. In addition, the increasing time and cost of new pharmaceuticals development and increasing global competition require Japanese companies to find strategies to maintain their unique strengths.
New Opportunities for Growth
At the same time, opportunities for growth abound in the Japanese pharmaceutical industry. Advances in biotechnology, regenerative healthcare, and increasing demand for personalized medicine are creating new markets, while in digital healthcare, wearable devices and AI-based pharmaceutical research are expected to play an important role in R&D efficiency. In addition, the expansion of the middle class in the Asia-Pacific region is creating new market opportunities and will be key for Japanese companies to maintain and expand their international competitiveness.
Conlusion
While the Japanese pharmaceutical industry faces many challenges, such as soaring new pharmaceuticals development costs, labor shortages, and the need to respond to intensifying global competition, it is possible to see opportunities in overseas markets, such as the growing middle class in the Asia-Pacific region. Therefore, it is anticipated that attempts to expand into overseas markets not only through M&A among domestic companies but also through M&A with overseas companies will continue to increase in the future.