Market Overview

While the FY2021 sales performance at leading domestic pharmaceutical companies faced challenges in domestic business in association with drug price revision in April 2021 and promotion of the use of generic drugs, large enterprises generally showed stable growth, against a back drop of expansion of new drugs sales overseas bringing about increase in revenues and profits, which led the entire market size to exceed the level of FY2019, before COVID. Still, harsh situation continued for midsize firms that have primarily focused on domestic business.

In such a situation, each pharmaceutical company aimed to develop the cutting edge of drugs by applying advanced technologies, which generally encouraged the expenses for research and development to be on the rise. In addition to longer time needed, the level of difficulty in new drug development in recent years has been increasing. Higher cost particularly for clinical tests (outsourced) in the development phase has been inflicting a heavy burden to pharmaceutical companies.

As the investment in R&D to generate innovative drugs is a lifeline for pharmaceutical companies all the same, the investment amount is likely to expand for the future. In order to concentrate the corporate resources on creating innovative drugs, companies are transferring manufacturing facilities, long-listed drugs, and generic drug businesses.

Noteworthy Topics

DCT (Decentralized Clinical Trials) Attracting Attention as Post-Corona Clinical Case

The new coronavirus pandemic has affected medical institutions and CROs (Contract Research Organizations) to consider taking measures such as online diagnosis, visiting patients’ home, thereby to dispense patients with visiting hospitals and clinics, or to perform clinical trials with fewer times to visit medical institutions. In such a situation, what attracted attention are DCTs (Decentralized Clinical Trials).

DCTs allow performing of clinical trials at decentralized places, such as at patients’ home, unlike conventionally done at only medical institutions, thereby enabling patients to participate in clinical trials without regularly visiting medical institutions. Conventional medical care is supposed to take place face-to-face at hospitals and clinics, but advancement and spread of digital technologies have enabled to provide various forms of medical care, including online. Against this backdrop, DCTs can make clinical trials to be performed contactless by using smartphones and wearable terminals. When performing clinical trials, it is needed to ask patients to apply for the program, and when the participation is permitted, the trials are done not on a face-to-face basis but via internet or video calls at the patients’ home, though the trial contents and process flows must be explained beforehand.

Being focused anew amid the pandemic, CROs and their group companies are about to press ahead with DCTs. On the other hand, because of such a rapid change within the past year or two, privacy issues and setting of clear-cut criteria have not yet been solved, which has increased the cases to rely on on-site decisions, expanding the burdens at the medical institutions’ side. On the patients' side, they sometimes face a psychological barrier that makes them feel online as insecure or face-to-face as more secured. While such legal issues and psychological challenges are needed to overcome, as DCTs become popular, it is expected to increase the options for disease prevention and medical treatment methods. DCT-support service providers are also showing vigorous efforts, which is worth paying attention.

Future Outlook

It has become more necessary for pharmaceutical companies to outsource not only the monitoring process but a series of processes of clinical trials to CROs. In order for CROs to respond to such needs expansion of business size is required, which have resulted in industrial reorganization. Such a tendency is likely to continue for the future. While rapid expansion of business scale for CROs may be difficult, those CROs with high degree of specialization or with superior dedication in specific fields have high potential to survive, though the business size may be small.

In addition, if pharmaceutical companies shift from the development of large-scale items to small-scale items or to orphan drugs, and if streamlining of clinical trials is to be contemplated including measures toward digitalization, the importance in the number of CRAs (Clinical Research Associates) in CROs can be lowered. Due to higher necessity to respond to overseas demand such as international joint clinical trials, or to provide new services, it is highly likely for overseas companies and those firms from different industries to increase the business alliances and acquisitions with those companies with the knowledge they do not have.

Research Outline