Japan being the second largest pharmaceutical industry in the world, worth $60.3 billion as of 2005, is yet to gain a strong foothold in developing new drugs and in outsourcing. What is holding back this giant from attracting investments to help speed the drug approvals? Can speedy drug approvals help clinical outsourcing within Japan?

Drug lag is the time taken between the review and the approval of the drug. In Japan, it takes nearly 2-3 times longer for the drug to hit the market compared to the United States and Europe. The number of clinical trials conducted has become crucial in Japan, and the domestic companies are opting to conduct their clinical trials in the foreign countries, reducing the scope for outsourcing within Japan. This has caused the hollowing-out of clinical trials in Japan. Hence, the drug lag leads to an unfavorable situation for outsourcing within Japan.

Factors encouraging drug lags in Japan

Tough Regulations

The introduction of ICH E5 (This allows a western pharmacokinetics (PK) Phase III data to be submitted if the Japanese Phase I-II PK data was found to be comparable with the western Phase I-II PK data) has not been lucrative, with no new drugs being approved from 2003 to 2005. With no base guidelines on the acceptable foreign clinical trials data, each case needs to be dealt with individually. When we compare the review time for new drug approval in Japan and the EU, we find that Japan has always taken a longer time than EU and in 2005, it shot upto 23 months of waiting time against 15 months in EU.

Chart 1

Clinical Study- Drug Lags

Source: Frost and Sullivan

Due to the long approval time taken, the number of products waiting to be marketed is also increasing.

Chart 2

Number of Products Waiting to be Marketed in 2004

Source: JPMA

Inter ethnic differences between Japanese and Caucasians. In order for a drug to get approved in Japan, the regulators have insisted on conducting the first three phases of clinical trials on the Japanese population, which is a time-consuming and an expensive process.

The companies’ mind set is yet to move out of the traditional method of drug development through in-house activities. The over reliance on in-licensing and the lack of motivation toward innovation has prevented them from investing in R&D.

The other reasons for the drug lags include:

• Language barrier
• Lack of incentives provided for the physicians
• The lack of patient understanding
• Longer time for patient enrolment
• Tougher media coverage

Steps Taken to Improve the Situation

Government

Japan has undergone two major developments in the Pharmaceutical Administration, which has now resulted in speeding the drug approvals, although it is yet to reap the full benefits of the same.

The first major change took place by conducting the revision of GCP, for safety concerns of clinical trials and to set up an internationally harmonized guideline. It also recognized foreign clinical trials to help minimize expensive duplication of effort. While this was taking effect and getting settled, the second development occurred in 2001-2002, with the revision in the Pharmaceutical Affairs Law. This law stipulated on the regulations relating the efficiency, quality and safety. Setting up of the Pharmaceutical and Medical Device Association is also a major step taken toward /improving and reducing the drug lag.

In 2006, the Japanese Prime Minister, Junichiro Koizumi, has highlighted the concerns arising due to this burgeoning problem, and has laid down the progression path as follows:

-Promotion of clinical trials

-Establishment of clinical trial issue review committee

-New guidelines for global studies- Aiming at simultaneous global development that includes the trilateral arrangement between Japan, the United States, and Europe, as well as improved resources and infrastructure.

Mergers and acquisitions among the multinational companies and the domestic participants such as Yamanouchi and Fujisawa, and Daiichi and Sankyo, have accelerated the pace of reorganization within the Japanese pharmaceutical industry making Japan a favorable place for clinical trials and outsourcing within Japan.

Global Joint Clinical Trials

The Pharmaceutical Industry in itself is a factor for encouraging clinical trials.

The bridging development strategies have been implemented, whereby the overseas clinical data from Europe and/or the United States is made use of in the applications for regulatory approval, which will definitely reduce drug lag. However, if the trend of conducting trials continues in the United States and Europe, Japan will eventually fail to accomplish its task of developing new drugs. Hence, attempts to improve clinical trial environment and the study data must be clearly outlined. Japan needs to participate in such studies in order to be accepted in the tripartite. Pharmaceutical and Medical Devices Agency (PMDA) has decided to give priority to clinical trial consultations, which are relevant to global joint clinical trials from fiscal year 2006.

Set up of Contract Research Organizations (CROs)

Outsourcing is the key current trend! Even with the CROs entering the region, Japan faces tough international competition. The initiatives taken to reduce drug lags have helped CROs to make their entry into Japan. Approximately 77 percent of outsourcing was done by Japanese clients in 2005. Parexel, an MNC has made their entry as CRO with ease by tapping the right areas. CMIC, one of the leading domestic CROs in Japan has collaborated to work with PPD, the U.S.-based CRO, which will help PPD to extend its CRO business with the Japanese client.

Outlook

Strengthening of standardized guidelines and legal issues will help speed up the drug approvals. This in turn will help clinical trial outsourcing. This is completely in the hands of the government to take initiatives to make their destination a hot spot in the forthcoming years.

The other suggestion is the development of a two-tier system, where the products can be divided as priority and non-priority groups, which will help in easing the reviewing process and speed up the approval process. Efforts are being taken to attract global clinical trial consultation and to review and perform them in Japan. Such initiatives taken by the government are likely to make Japan a lucrative region for conducting clinical trials and reducing the lag in the approval of drugs, although it may take a little while.

Sources:

Japan Pharmaceutical Manufacturers Association- JPMA

Pharmaceutical and Medical Device Agency- PMDA

Drug Research

Japan Clinical Research Organization- JCRO

About the author

Sushma Rajan is a Research Associate with the Frost & Sullivan Asia Pacific Healthcare Practice. She focuses on monitoring and analyzing emerging trends, technologies and market behavior in the Drug Discovery Technologies market in APAC.

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