Due to the country’s efforts to control increasing medical expenditures, Japanese pharmaceutical companies have been turning to Contract Research Organizations (CROs), which have grown considerably in recent years
With pressure to save costs on staff, research and clinical trials as demand for innovative new medicines rises across the globe, the number of pharmaceutical companies outsourcing to Contract Research Organizations (CROs) has grown considerably in recent years.
In Japan, the world’s second largest pharmaceutical market, the CRO industry has expanded over the past decade, reaching JPY163 billion in 2016. The growth has been spurred by domestic Japanese pharma companies that have followed in the footsteps of foreign firms in the country, by partnering with CROs, rather than doing traditional inhouse research.
The Japanese CRO market is made up of around 50 companies, but is dominated by four large firms: CMIC, EPS, Quintiles and Parexel.
“Demand for outsourcing clinical development works has remained strong. Therefore, the Japanese CRO market will likely continue to grow for a while. More concentration into the top four companies is also expected in the near future. The environment surrounding small- and mid-sized CROs will become difficult more and more over the time,” states a report by Research and Markets.
CMIC became Japan’s first CRO in 1992. It made its first venture overseas to Korea in 1996, and now also operates in Vietnam, China, Malaysia, Singapore and the U.S., where it launched its contract manufacturing organization in NJ in 2007, more recently, its bioanalysis operations in Chicago in 2015.
“The intensification of global competition in new drug development has provided strong impetus for many drug companies to shift to a cooperative division of tasks, including drug discovery and marketing, that they once managed to do on their own,” says CMIC chairman and CEO, Kazuo Nakamura.
“As a reliable partner, CMIC Group is participating in the evolution of pharmaceutical companies and, as a result, will emerge as a company that can make its presence felt in society.”
The CMIC Group consists of 22 companies, including CMIC Holdings Co. Ltd. and consolidated affiliates. The Group’s businesses mainly involve support for the pharmaceutical industry. Instead of making drugs, it offers comprehensive ‘one-stop shop’ services related to drugs, from research and development to manufacturing and sales. Leveraging its experience and expertise as a pioneer CRO, its business has expanded to create added value in such fields as drugs, medical devices and health foods.
In 2014, the Japanese government launched the Sakigake Strategy, an effort to rapidly turn Japanese innovation into new drugs, devices and regenerative medicines that could cure serious diseases. It aims to make Japan a global leader in the practical application of innovative medical products. This initiative shall be quite attractive for international healthcare companies as well, says Mr. Nakamura.
“The government now provides support at the various clinical approval stages, including rapid drug authorization. This shall be a good opportunity for the international healthcare players to view Japan as a good business partner,” he says.
“We, CMIC, are proud of ourselves that, as a pioneer of the Japanese CRO business, we have been able to contribute to the Japanese healthcare system for a quarter century and assist 80 percent of the new drugs approved in Japan last year.”
Japan’s massive healthcare market is a lucrative, yet complex, one for foreign firms to break into. Mr. Nakamura points out that CMIC is the great CRO partner for foreign firms looking to enter the market quickly and easily.
“We now provide the ‘one-stop’ pharmaceutical support services, from research, production, distribution, and all the way to post-marketing surveillance, with intentions to offer business solutions to our clients rather than simply to execute the outsourced functions (Called Pharmaceutical Value Creator),” he says.
“We believe that our business model is especially appealing to international pharmaceutical companies seeking to enter the Japanese market, which is the second largest with consumers who are demanding more innovative and better products from overseas. With our services offering, we are confident to support any international pharmaceutical clients entering this market.”
Of course, as aforementioned, there are four big players in the CRO market in Japan. So, what is CMIC’s competitive advantage?
“One of our core differentiating factors is our Pharmaceutical Value Creator concept. For example, other CRO companies, even our global peers, are not able to provide manufacturing, while we provide the manufacturing service as a part of ‘one-stop’ pharmaceutical service together.
“The government now provides support at the various clinical approval stages, including rapid drug authorization. This shall be a good opportunity for the international healthcare players to view Japan as a good business partner”
“In addition, with our Pharmaceutical Value Creator concept, we are able to support pharmaceutical companies, even an international company that is entering Japan for the first time, from the start to the end of the pharmaceutical business process.”
On the topic of social responsibility, Mr. Nakamura believes that the whole pharmaceutical industry needs to change how it operates. “Pharmaceutical companies need to be better corporate citizens by focusing more on those who are financially less fortunate and those who suffer from rare diseases, which is critical for protecting not only the corporate brand value, but also employees,” he says.
“The biggest challenge for the industry is how to revolutionize the conventional pharmaceutical commercial model into a socially responsible pharmaceutical business model. For example, not all the pharmaceutical companies have established a viable business model, financially and/or technically, to provide off-patent drugs or to own internal R&D functions for orphan drugs.
“CMIC has the willingness and capacity to provide solutions to these pharmaceutical companies by offering comprehensive support throughout their whole value chain. With our more flexible cost structure and our profitable ventures in the CDMO and orphan drugs, we could provide various solutions for these pharmaceutical companies.”
Moving forward, Mr. Nakamura would like to see CMIC gain a greater foothold in the international market, in order to help tackle some of the greatest challenges in global healthcare.
“Through our 25-year history, we gradually expanded our presence from Japan to all of Asia and to the U.S. We would like to expand our footprint further into international markets over the next 25 years. We are quite excited about the current environment CMIC is in and would like to contribute more to the healthcare industry than what we have done for the last 25 years, not only in Japan, but also internationally.”