Market Overview

In FY2022, the size of pharmaceutical industry overall exceeded that of pre-pandemic levels. While the promotion of using generic drugs impinged on the domestic pharmaceutical sales, as witnessed in the increases in both sales and profits for multiple major Japanese pharmaceuticals, major pharmaceuticals were robust against the backdrop of the growing demand for COVID-19 treatment drugs and the progress in global new drug development. Nonetheless, the situation is still tough on quite a few medium-sized pharmaceuticals that mainly market domestically.

Noteworthy Topics

R＆D Strategy of Pharmaceutical Companies

Compared to the world's largest pharmaceutical companies, business scale of Japanese pharmaceutical companies is smaller. To expand their business size and spending on research and development (R&D), they depend on large-scale M&As. The number of overseas company acquisition is expected to rise, since not only those that have done major acquisition in recent years but also others with fewer M&A experiences are embarking on increasing the ratio of overseas sales, as well as reinforcing business in key business areas.

There is no doubt that when business size multiplies, chances to squeeze in larger budget on R＆D becomes greater. However, the amount of R&D spending does not a sole determiner for the success of new drug development. In fact, the number of items, quality of items, and success rate matters. Hypothetically, even if it is a medium-sized, a company can continue new drug development and thrive in the industry if it stands out by focusing on their specialty.

Moreover, while the demand for biological drugs continues to rise, domestic pharmaceutical companies are falling behind the foreign pharmaceutical companies in its development. It goes without saying that Japanese pharmaceuticals need to improve their own R&D capabilities. Yet, to increase competitiveness further in biological drug development, they must also align with other companies in and outside of Japan, as well as find seeds (as in "seeds and needs") at biotechs, universities, and other research institutions and foster them collaboratively.

R&D strategies of pharmaceutical companies can be manifold. Pharmaceutical companies with optimal strategy will increase opportunities for new drug development and expand their business size.

Future Outlook

Stable growth of the CRO market has been driven primarily by the vigorous promotion of pharmaceutical companies to outsource clinical trial management to reduce cost and enhance efficiency in new drug discovery process. CRO has been increasing presence particularly in monitoring, data management (DM)/statistical analysis, and most recently, pharmacovigilance (PV). Services also undertake the development of medical devices and regenerative medicine, as well as consulting.
Going forward, the CRO market expects an increase of orders in new areas, such as regenerative medicine, clinical research, and post-marketing surveillance, in addition to the expansion of the current outsourced operations in clinical development of pharmaceutical companies.

Research Outline