In "Super-Aging" Japan, the Life Sciences Market is Booming

April 2024

In the battle against cancer, a disease known to have higher risks with increasing age, some forms make for particularly nasty opponents. Large B-cell lymphoma (LBCL), one of the most common types of malignant lymphoma in Japan, is one such adversary: aggressive and hard to treat, this non-Hodgkin's lymphoma subtype is all too often fatal.

So it was welcome news in Japan that the Ministry of Health, Labour and Welfare approved a new treatment for relapsed or refractory LBCL patients in September 2023. The antibody-based therapy was developed by Genmab, a Danish biotech company, and an American partner.

Genmab is one of a growing number of global life sciences companies that are expanding their businesses in Japan, as the industry takes a fresh look at the country amid a government-led effort to lower barriers to market entry and promote the adoption of cutting-edge medical treatments.

"We can see that the government wants to bring in innovative therapies," says Edward Ramirez Ganoza, Head of Development for Japan at Genmab. "Compared with, say, 15 years ago, the review periods for new treatments have been significantly reduced, and are very competitive."

Around the world, aging is becoming a serious issue for governments and health care systems—the "real population bomb," in the words of the International Monetary Fund. Nowhere is this phenomenon more visible than in Japan, where unprecedented longevity and a low birth rate have produced the oldest population of any large country.

Approximately three out of ten Japanese are now over age 65, and one out of ten is over 80. The term "super-aging society" has entered the working vocabularies of millions of Japanese.

In such a society, it is a major challenge to ensure that elderly people remain active and healthy. When life expectancy expands faster than "healthy life expectancy"—as experts call the period when people are mobile and free of debilitating age-related diseases—the result is lower quality of life and ballooning medical and social security costs.

Extending healthy life expectancy requires innovation, a fact that is reflected in growing demand in Japan for cutting-edge pharmaceuticals and medical devices.

According to IQVIA, a healthcare research company, the Japanese market for new and patented pharmaceuticals is expected to reach 11 trillion yen by 2027, making it the second largest in the world after the United States. Sales of current patented medications are set to grow by 6.5 to 7.5 percent annually in the half-decade between 2023 and 2027, according to IQVIA. At the same time, between 1.1 and 1.2 trillion yen of new drugs are expected to reach the market.

This scale and growth potential make Japan an attractive market for both Japanese and international life sciences companies.

The market has not always been easy to access, however. Experts point out the twin problems of "drug lag" and "device lag," in which pharmaceuticals and medical devices that have received approval from health regulators in other countries can take longer to be approved for use in Japan. Challenges with navigating the country's government-controlled pricing system and licensing procedures have often been seen as causes.

Japan has recognized the issue and responded. The Ministry of Health, Labour and Welfare (hereinafter, "MHLW") actively recruits and supports companies that develop medically important treatments for the Japanese market. MHLW is seeking drugs that have been approved in the US, Germany, France, Canada, Australia, or other approved drugs that are not being authorized in Japan. Moreover, it promotes the development of drugs through tax deductions, drug-price incentives, as well as subsidies to offset R&D and application fees.

More government programs have been added during the Covid-19 pandemic. The Ministry of Economy, Trade and Industry, for example, launched an initiative worth 300 billion yen in fiscal 2022 to support biopharmaceutical manufacturing—specifically vaccines—and a 350 billion yen program to strengthen the pharmaceutical startup ecosystem.

The Cabinet Office, meanwhile, has made expanding healthy life expectancy to 100 years one of the 10 goals of Japan's national "moonshot" research and development policy, which supports challenging R&D projects that aim to resolve difficult societal issues by drawing on the wisdom of researchers around the world.

Businesses are also anticipating a rush by domestic and foreign companies into the life sciences market in Japan.

In August 2023, ITOCHU Corporation (hereinafter "ITOCHU"), a major trading company, announced that it launched a new "one-stop" support service for medical device manufacturers seeking to bring "domestically unapproved but promising" technologies to Japan. The business will guide device makers through processes ranging from market surveys to clinical trials, regulatory applications and sales.

According to ITOCHU, the healthcare industry "will be able to offer more treatment options to patients and contribute to the promotion of health and the resolution of social issues in Japanese society," by introducing advanced medical devices quickly from the US, Europe, Japan, and other Asian countries.

For many researchers and company executives, Japan's promise goes beyond its expanding life sciences market. The country is at the leading edge of a global aging-populating wave. That creates big challenges, but also opportunities for both developed and adopted treatments in Japan to have a global impact.

"Many Asian countries' pharmaceutical sectors look to Japan as a reference," says Atsufumi Taniguchi, Head of Commercial for Genmab in Japan. "We see Japan as a future bridge to the rest of Asia."