Shin Ashida, Chairman, President and CEO, JCR Pharmaceuticals
International media, such as the Financial Times or the Economist have questioned the implementation of the third arrow of Abenomics, however we have seen several reforms take place in the defense, agriculture and tourism sector. In your sector, we have seen the introduction of the Japan revitalization plan closely linked to the health sector to increase productivity and life span of the Japanese population
Abenomics has also revised the Pharmaceutical Affairs law, how did this affect the pharmaceutical industry as a whole? And the regenerative medicine sector?
Under the Abenomics reform I believe that the current administration has fostered tremendous innovation in the medical industry. Furthermore, such a policy is telling us that we need to continue to come up with innovation in these areas, such as regenerative medicine and new drug development, thus stirring much activity in these fields. They are also emphasizing constraining medical costs and keeping them in check, which is a major issue in Japan. I believe that keeping healthcare costs low conflicts with the expectation of innovations from pharmaceutical industry.
Regarding regenerative medicine, we are working with mesenchymal stem cells, and we have succeeded in bringing it to the market stage. We brought in the technology from the U.S., and it has taken us 12 years to develop into a therapeutic product, TEMCELL® HS Inj., to treat acute graft-versus-host disease – finally last year, we got the approval from the government. In the future, we will be seeing much more cell therapy and regenerative medicine technologies as one of the main R&D pillars of our company.
There are many experts in the sector who believe that one should import medical technology and pharmaceuticals from overseas and develop them here in Japan. It is one option.
The increasing aging population is putting pressure on government healthcare expenditures in the country. Currently, the population over 65 years of age constitutes ~26% of the total population in Japan, and it is expected to increase in the near term to reach 40% by 2050. It is therefore crucial for Japan to count on companies such as yours to better the quality of life of this ageing population. Japan is a very particular market that one needs to be familiar with to benefit from it.
Which are the consequences of such phenomena and which are the possible solutions to it?
Up until now many companies in Japan, especially the larger ones have focused on developing medications for the older population. However, sometimes I wonder whether targeting people that are 65 and older might have some drawbacks. When people over that age are living longer thanks to the medical advancements and thus the age expectancy has increased, I wonder to which degree it is positive for Japan. This is an extremely important issue that the government needs to consider, because if you are trying to decrease medical costs, considering Japan’s universal health insurance system, and the fact that people in their 90s use their insurance for treatments and continue on into their 100s, you kind of have to look at it and assess whether this is the path we really want to follow. As you may know a new drug for cancer that boosts the immune system has been created and has been administered to people that are 100 year +. Furthermore, it seems to be having positive results and therefore from a scientific point of view it is a great success. However, I personally question where priorities should be set in administering such drug.
I also believe that if you can keep people healthy through initiatives encouraging prevention and healthier lifestyles, medical costs will go down, otherwise they will never decrease.
Mr. Ashida for over 40 years, your company has continuously been evolving, adapting and helping to provide high quality drugs, medical devices and laboratory instruments to the Japanese people since its foundation in 1975. JCR Pharmaceuticals has not only become a key player in Japan but also a key partner for many foreign entities.
Could you tell us more about JCR Pharmaceuticals milestones and history, and explain us how you plan to become an institution of reference in this industry?
JCR, in its early years of inception since 1975, had been engaged in the research of isolating enzymes and proteins from human source. We supplied our first product, urokinase which was derived from human urine, to a company in France as a raw material for their pharmaceutical product. Although we had developed multiple drug candidates from human origin, in the ‘80s there were growing regulatory challenges around potential viral risks associated with natural derivatives such that we needed to quickly shift to recombinant DNA technology.
While we manufactured a recombinant human growth hormone product sourced from the bulk drug substance imported from overseas and commercially sold on the Japanese market, we explored our capabilities in recombinant technologies, developing products in-house. Here, erythropoietin served as a good model for us to experiment on and we succeeded in coming up with a biosimilar to the originator product. However, we decided right from the outset that we needed to focus on rare diseases and orphan drugs in order to find our niche, our path of survival to stay competitive on the market.
As such, we directed our attention to lysosomal storage disorders (LSDs) which are a group of about 50 diseases of different type and decided to approach each of them in sequence. In fact, our R&D engagement in LSDs matched the interest of GlaxoSmithKline for collaboration then.
As we pursued research in developing therapeutic enzymes for enzyme replacement therapy for LSDs, we realized that native enzymes for LSDs do not pass the blood brain barrier, which is critical in treating certain LSDs. This became a scientific challenge for our young researchers – how to penetrate the blood brain barrier and deliver the therapeutic enzyme into the brain. Eventually, they succeeded in doing that.
One of the reasons that led us to success was the fact that JCR’s research arm is structured in such a way that the researchers have freedom to explore and develop what they want, whatever concepts they come up with – we support and encourage all their visions. All 100 of our researchers have been producing good results over the last 2 years because of this new R&D structure, which I believe is one of the biggest components of our success.
As Japan’s birthrate continues to decline we want to take our technology beyond Japan’s borders to an international market. Our corporate concept combines sales with research and development, whereas most companies approach this through a venture business.
JCR has been operating successfully internationally in locations such as Switzerland among others. What are JCR’s competitive advantage both, domestically and internationally?
One of our advantages is that we are constantly creating new technology which can be applicable to both domestic and international markets. As such, in expanding our business internationally, we believe that our subsidiary in Switzerland may play an important role in coordinating overseas business activities. We expect that afore-mentioned J-Brain Cargo® as a platform technology may contribute to establishing new collaborations with companies for outside Japan, as well as JR-141, our drug candidate based on said technology, to treat LSD patients in Japan and abroad.
The renowned GlaxoSmithKline holds nearly 25% of the total outstanding shares of JCR Pharmaceuticals. This strategic partnership gives JCR Pharmaceuticals access to a global market.
How are you portraying your company’s brand abroad and positioning it in the international market?
The partnership with with GSK which began with collaboration in the rare disease field, enabled us to prepare for the international market. As a result, we were able to increase the quality level of our biotech manufacturing facilities to where we could meet FDA and European standards. This added capability opens up to other global partnering opportunities for JCR.
Your annual sales are currently at roughly 17bn yen and you are aiming for 25bn yen by 2019, what is the strategy in order to achieve this earnings expansion?
The sales of our growth hormones are gradually increasing and we expect them to continue doing so. Also, in January, we have launched a new product in liquid form that replaces the conventional lyophilized form requiring dissolution. The new product has been received extremely well. Together with incremental sales of TEMCELL® HS Inj., erythropoietin, and potential licensing revenues related to innovative products under development, we believe our 25 billion yen sales goal is achievable.
Which are your top priorities for the near future?
Technologically speaking our top priorities will be the products that we are developing capable of passing the blood brain barrier. If those products are licensed they will benefit our company immensely. We have 8 series of these that we are working on. Furthermore there are companies that have already expressed their interest, therefore establishing a partnership with them, are a few of my primary focuses.
How do you think the concepts of “Monozukuri” and “Omotenashi” bring better products for your company?
With “Monozukuri” obviously, it ties to our pride in establishing our proprietary platform technologies and the quality of products that we develop and manufacture utilizing such technologies. It is our mission to offer value-added treatment options particularly in the rare diseases field to patients not only in Japan and the major countries but also those countries with underserved patient community. We believe and hope that in the near future we will be able to fulfill this mission. This is our approach for “Omotenashi.”