The report offer detailed study of OTC and prescription drugs market, key trends, driving forces and recent Mergers and acquisitions. The report also talks about future outlook of overall Japanese Pharmaceutical industry and demand for prescription and OTC drugs in coming years.

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2. TABLE OF CONTENTS
1. Industry Snapshot
1.1. Global Market Overview
2. Japan Healthcare Sector
2.1. Pharmaceutical Market Size
Impact of Earthquake and Tsunami over Pharmaceutical Industry in Japan
Pharmacies
2.2. Japan Pharmaceutical Market Forecasts
3. Drugs Classification and Market Size
3.1. Classification by Distribution Channels
3.1.1. Ethical/Prescription Drugs
3.1.2. Over the Counter Drugs (OTC)
OTC Drugs Demand by Major Categories
3.2. Industry Forecast by Distribution Channels
3.3. Classification by Type of Drugs
3.3.1. Patent Drugs
3.3.2. Generic Drugs
4. Growth Drivers
Chronic Diseases
Rapidly Aging Population
Rising Medical care Expenditures
Consumer Expenditure
Health Insurance and Life Expectancy
5. Industry Developments
5.1. Recent Trends
5.2. Recent Pharmaceutical Industry M&A Activities
5.3. Regulatory Structure
5.4. Key Issues
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3. 6. Country Analysis
6.1. Key Findings
6.2. Political Environment
6.2.1. Government Policy
6.3. Macro-economic Indicators
6.3.1. GDP Recovery and Growth
6.3.2. Population
7. Industry Competition and Players Profiling
7.1. Competitive Landscape
7.2. Takeda
7.2.1. Business Overview
7.2.2. Key Financials
7.2.3. Key Findings
7.3. Astellas
7.3.1. Business Overview
7.3.2. Key Financials
7.3.3. Key Findings
7.4. Daiichi Sankyo Group
7.4.1. Business Overview
7.4.2. Key Financials
7.5. Roche (Chugai)
7.5.1. Business Overview
7.5.2. Key Financials
8. Appendix
8.1. Abbreviations
8.2. Definitions
8.3. Research Methodology
Data Collection Methods
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4. Approach
8.4. Disclaimer
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5. LIST OF FIGURES
Figure 1: Global Pharmaceutical Market by Value (2006-2011E)
Figure 2: Japan Pharmaceutical Sales by Facility in 2010 & 2011E
Figure 3: Japan Pharmaceutical Industry Revenues (2006-2011E)
Figure 4: Japan Pharmaceutical Industry Forecast (2011-2016)
Figure 5: Share of Drugs by Distribution Channels in (2006-2011)
Figure 6: Prescription Drugs Retail Sales by Value (2006-2011E)
Figure 7: OTC Drug Retail Sales by Value (2006-2011E)
Figure 8: Prescription Drugs Retail Sales Forecast by Value (2011-2016)
Figure 9 : OTC Drugs Retail Sales Forecast by value (2011-2016)
Figure 10: Generic Drugs Retail Sales by Value in Japan (2009-2011E)
Figure 11: Japan Aging Population (2006-2010)
Figure 12: Japan Medical Care Expenditures (2006-2010)
Figure 13: Medical Care Insurance (2006-2008)
Figure 14: Japan GDP (at current prices) (2006-2010)
Figure 15: Japan Total Population (2006-2010)
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6. LIST OF TABLES
Table 1: Global Pharmaceutical Market by Geography (2009, 2010 & 2011E)
Table 2: Number of Pharmacies by Territories in Japan 2010
Table 3: Health Food/Vitamin Import by volume and value (2006-2010)
Table 4: Common OTC Drugs Classification and Market by Value (2006-2011E)
Table 5: Health care Sector in Japan (2005-2010E)
Table 6: Foreign Acquisitions by Japanese Pharmaceutical Companies (2007-2010)
Table 7 : Country Overview
Table 8: Japanese Economy (2010-2012)
Table 9: Leading Pharmaceutical Manufacturers in Japan in 2010
Table 10: Comparison of Key Financials in 2010
Table 11: Players Market Share in Ethical Drugs Segment in 2010
Table 12: Takeda Revenue by Geography (2010&2011)
Table 13: Astellas Revenue by Geography (2006-2010)
Table 14: Roche (Chugai) Financials
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7. GLOBAL MARKET OVERVIEW
The trend towards healthy lifestyles and rising healthcare awareness has become a global
phenomenon. In the first quarter of 2010, advertising expenditures on pharmaceutical
products grew 3.60% compared to the same period last
Japan is the second largest year, generating USD ~ billion revenues. Japan is the
market for pharmaceuticals,
second largest market for pharmaceuticals, accounting for
accounting for 11.20% share in
global pharmaceutical industry 11.20% share in global pharmaceutical industry. The
impact of recent economic turmoil was not much over
domestic pharmaceutical companies due to an increase in value of Japanese currency against
USD.
Figure: Global Pharmaceutical Market by Value (2006-2011E)
1,000
900
800
700
600
USD Billion
500
400
300
200
100
0
2006 2007 2008 2009 2010 2011E
Table: Global Pharmaceutical Market by Geography (2009, 2010 & 2011E)
2009 2010 2011E
US
Japan
Europe
Others
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8. JAPAN HEALTHCARE SECTOR
The Japanese government is introducing changes in the pharmaceutical industry policies to
make it more transparent and to control counterfeiting of medicines. Government and
healthcare agencies are planning to increase spending on technologies to improve R&D and
manufacturing of drugs.
PHARMACEUTICAL MARKET SIZE
Drug stores, hospitals and clinics account for the largest demand for pharmaceuticals while
supermarkets and other confectionary stores (permitted to keep general cold and flu
medicines) account for only a small percentage of demand. Pharmacies and drug stores hold
51.30% share in terms of sales of pharmaceuticals followed by hospitals and clinics.
Figure 1: Japan Pharmaceutical Sales by Facility in 2010 & 2011E
120%
100%
80%
60%
40%
20%
0%
Hospitals Clinics Pharmecies & Drug Others
Stores
2010 2011E
Note: Hospitals include both small & large in size
In 2009, pharmaceuticals market in the
In 2010, Japanese pharmaceutical country grew 8.67% to USD ~ billion. This
industry recorded USD 96.13 billion growth was mainly driven by the treatment of
revenues and grew almost at a steady
chronic diseases and government healthcare
rate in 2011
spending. During the same year, some leading
pharmaceutical companies in Japan witnessed slow growth in sales due to fall in demand in
some categories of medicines such as energy drinks, vitamins, Systemic Antibacterial,
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9. Calcium Antagonists and expensive drugs used to treat dementia and other chronic
conditions.
In 2010, Japanese pharmaceutical industry recorded USD ~ billion revenues and grew by
5.79% in 2011.
Figure: Japan Pharmaceutical Industry Revenues (2006-2011)
120
100
80
USD Billion
60
40
20
0
2006 2007 2008 2009 2010 2011E
PHARMACIES
According to MHLW, in 2010, there were ~ pharmacies 1 in Japan, accounting for 42.00% per
100,000 populations while ~ convenience stores were recorded. Saga, Hiroshima, Fukuoka,
Yamaguchi and Kochi has most number of pharmacies; the large numbers of pharmacies
represent high demand for drugs.
1
The on-site pharmacies in hospitals are referred to as dispensing facilities and are not managed by the MHLW, they are
not included in the number of pharmacies
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10. Table: Number of Pharmacies by Territories in Japan 2010
Pharmacies
Rank Prefectures Number Per 100 thousand population
1 Saga
2 Hiroshima
3 Fukuoka
4 Yamaguchi
5 Kochi
6 Tokushima
7 Tokyo
8 Kagawa
9 Nagasaki
10 Miyazaki
11 Kagoshima
12 Miyagi
13 Yamanashi
14 Akita
15 Gifu
16 Tottori
17 Niigata
18 Oita
19 Iwate
20 Shizuoka
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11. JAPAN PHARMACEUTICAL MARKET FORECAST
Japanese pharmaceutical industry is expected to grow at a slow rate due to government
reforms in healthcare policy aiming to control rising healthcare cost and uneven demand from
outside Japan. The market is expected to rebound by 2014 at 2.60% growth rate. The
Japanese pharmaceutical industry is expected to grow at a CAGR 2.65% from 2011 to 2016
reaching USD ~ billion.
Figure: Japan Pharmaceutical Industry Forecast (2011-2016)
125
120
115
USD Billion
110
105
100
95
90
2011 2012 2013 2014 2015 2016
CLASSIFICATION BY DISTRIBUTION CHANNELS
In Japan, prescription drugs accounted for the largest share of the market which is close to
93.00%. Although, OTC drugs accounted for a small percentage of the market but its share is
expected to improve from 2012 onwards.
11

12. Figure: Share of Drugs by Distribution Channels in (2006-2011) 2
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2006 2007 2008 2009 2010 2011
Prescription Drugs OTC Drugs
ETHICAL/PRESCRIPTION DRUGS
The Prescription drugs accounts for the largest share
The prescription drugs sales in
of total drugs sale in the country but a slow fall in its
the third quarter (July-Sep) of
market share is expected to start from 2012 onwards
2011 grew 4.70% compared to
same period in 2010 influenced by falling patent drugs retail sales growth.
In 2011, estimated prescription drugs sales by value
reached USD ~ billion. During the third quarter 2011, prescription drugs retail sales showed a
growth of 4.70% as compared to results generated in the Q3 2010 and in terms of value USD
~ billion.
Figure: Prescription Drugs Retail Sales by Value (2006-2011E)
100
90
80
USD Billion
70
60
50
40
30
20
10
0
2006 2007 2008 2009 2010 2011E
2
Here we have categorized drugs in two segments prescription drugs and OTC drugs. Drugs for household delivery have
been included in prescription drugs
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13. OVER THE COUNTER DRUGS (OTC)
Government initiative to deregulate pharmaceutical industry in Japan brought changes in
OTC structure wherein certain OTC drugs became quasi 3 to make available at general retail
stores such as convenience stores. In 2011, OTC
In 2011, OTC market grew by 4.26% market grew by 4.26% from previous year and its
from previous year and its share in
share in total pharmaceutical drugs market
total pharmaceutical drugs market
reached 6.98% reached 6.98% although this percentage was low
from 2010 results.
Figure: OTC Drug Retail Sales by Value (2006-2011E)
8
7
6
5
USD Billion
4
3
2
1
0
2006 2007 2008 2009 2010 2011E
OTC DRUGS DEMAND BY MAJOR CATEGORIES
Cold and Flu (C&F) Medicines
Cold & flu medicines are always on demand and account for a significant share of OTC
segment. Rise and fall on demand depends upon
Retail sales of cold and flu weather conditions, spending power and behavior
medicines grew by 3.88% in
pattern. Demand for OTC cold and flu medicines is
Japan
not stable in the country. The retail sales of cold and
flu medicines grew by 3.88% in Japan reaching USD ~ million in 2010.
3 Quasi drugs are defined as medications that are milder in effect than regular drugs and are safe to be purchased without
advice from medical experts, such as pharmacists.
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14. Health Food and Vitamins Market
The 2009 vitamin preparations market import fell compared to the figures recorded a year
back. In 2010, the total import of health food and vitamins reached ~ tons but on the other
hand, the total amount of imported vitamin powder decreased in 2010 due to the fall in unit
price led by price competition for end-products.
Table: Health Food/Vitamin Import by volume and value (2006-2010)
Volume Value
2006 2007 2008 2009 2010 2006 2007 2008 2009 2010
Homogenised composite food preparations
Panax Genseng and extracts
Food supplement with a basis of vitamins
Total Vitamin powder
Vitamin A
Vitamin B1
Vitamin B2
Vitamin B3/Vitamin B5
Vitamin B6
Vitamin B12
Vitamin C
Vitamin E
Total vitamin preparations
Other vitamins
Vitamin preparations
Total
Note: Volume in Tons, Figures in JPY Yen million
Digestive Medicines
Growth in this segment is uncertain,
The Japanese digestive medicines segment is depending upon changing lifestyle,
witnessing a continuous fall in shipment by environment, and awareness of cause and
volume and value from last four years
effect of health problems. The estimated
market size of digestive medicines is USD
~ million in 2011.
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15. Table: Common OTC Drugs Classification and Market by Value (2006-2011E)
2006 2007 2008 2009 2010 2011E
Cold & Flu Medicines
Health Drink
Digestive Medicines
Note: Figures in USD Million
INDUSTRY FORECAST BY DISTRIBUTION CHANNELS
In coming years prescription drugs demand is expected to show mixed results; initially from
2011-2013 it is expected to witness fall in growth rate and from 2014 onwards is expected to
witness a positive growth trend, although growth rate will be low compared to historical
performance. Prescription drugs share in overall pharmaceutical market is also expected to
decline from 93.01% in 2011 to 91.58% in 2016.
The overall prescription drugs sales is expected to register slow growth reaching USD ~
billion by 2016 at a CAGR 2.39% from 2011-2016.
Figure: Prescription Drugs Retail Sales Forecast by Value (2011-2016)
120
115
USD Billion
110
105
100
95
90
2011E 2012F 2013F 2014F 2015F 2016F
Vitamins, Antiallergic, skincare and Antibiotics will push the OTC drugs demand which
currently account for a small share of the overall pharmaceutical industry in Japan. OTC
drugs market is expected to grow at CAGR 6.22% from 2011-2016.
15

16. Figure: OTC Drugs Retail Sales Forecast by value (2011-2016)
12
10
USD Billion
8
6
4
2
0
2011E 2012F 2013F 2014F 2015F 2016F
CLASSIFICATION BY TYPE OF DRUGS
Drugs are categorized in two segments: Patent and Generic.
PATENT DRUGS
Patent can be applied or granted, this way a company receives an exclusive right to produce a
drug using certain process which cannot be copied. In 2010, ~% prescription drugs revenues
were generated by patented drugs in Japan.
GENERIC DRUGS
In Japan, generic drug market is in development stage, presently accounted for only ~% (by
volume) and 6.75% (by value) of the total drug sales in 2010. By the end of 2012,
government officials are expecting generics sales volume to increase by 30% from 22.60% in
2010. This growth will be driven by cost cutting in many patented drugs by government,
expiry of major drugs patents by 2012 and pressure on hospitals and clinics to support this
initiative. By value, generics market reached USD ~ billion in 2010 as compared to USD ~
billion in 2009 and is further expected to cross USD ~ billion by 2014.
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17. Figure: Generic Drugs Retail Sales by Value in Japan (2009-2011E)
7.2
7
6.8
USD Billion
6.6
6.4
6.2
6
5.8
5.6
2009 2010 2011E
COMPETITIVE LANDSCAPE
In recent years, many foreign companies entered in the Japanese pharmaceutical industry to
compete with domestic players in developing generics market. Many international firms such
as Mylan, Sandoz, Teva, Hospira, Actavis, Ranbaxy, Lupin, and Zydus have entered in the
market using different modes. Also, many small domestic players are entering into joint
ventures with large pharmaceutical companies to expand their reach and compete with large
foreign companies.
Table: Leading Pharmaceutical Manufacturers in Japan in 2010
Domestic Sales
Manufacturer (in billions of yen) Japan Ranking Market Share
Takeda
Astellas
Taiyo 4
Eisai
Daiichi Sankyo Group
4
Teva acquired a 57% stake in 2H2011
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18. Table: Comparison of Key Financials in 2010
Takeda Astellas Eisai
Earnings Per Share (Yen)
Return on equity (ROE)
Operating Margin (%)
Net Profit Margin (%)
Asset Turnover (%)
Source: Company Reports
Table: Players Market Share in Ethical Drugs Segment
Companies in Ethical Drugs Segment Market Share %
Takeda Yakuhin Kogyo
Astellas Seiyaku
Daiichi Sankyo
Mitsubishi Tanabe
Chugai Seiyaku
Eisai
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