The high cost of trials and the reluctance of many patients to take part in them remain a significant damper on clinical development in Japan, says a new report by PricewaterhouseCoopers.
At the same time, though, the local pharmaceutical market still holds a good deal of untapped potential, PWC believes. A greying population, efforts to accelerate new drug approvals, the elimination of mandatory local manufacturing and the promise of higher prices for genuinely innovative drugs have all sweetened the investment climate in the sector.
Moreover, indigenous companies are breaking free of their traditional reliance on in-licensing and ageing drug portfolios to pursue more research-intensive strategies, with the help of improved R&D tax credits introduced in 2003.
While the last few years have seen a deregulatory trend in Japan, such as acceptance of foreign clinical data in drug applications under revisions to the Pharmaceutical Affairs Law, approval trends and incentives to conduct clinical research have lagged behind those in other major markets. As PwC notes, in 2003, the average time from submission to approval of a new chemical entity in Japan was around 19 months, compared with about 12 months on average in the US and Europe.
The consolidation of three regulatory agencies into a single administrative body, the Pharmaceutical and Medical Devices Agency (PDMA), in April 2004 should help to cut the approval lag. By 2009, the PDMA aims to review 80% of all new drugs within 12 months, PwC points out. It also plans to introduce a fast-track procedure for new compounds offering significant clinical benefits.
Further back in the development cycle, the Japanese research base is improving rapidly, thanks to assorted government incentives to promote R&D, the PwC report says. Following increases to R&D tax credits in April 2003, the system was revised in the Tax Reform Act that took effect on 1 April 2006. Large companies can now claim a tax credit of 8-10% on all research and development expenditure up to a “comparative R&D expense” ceiling – the average amount they spent on R&D during the previous three years – and of 13-15% on any R&D outlays above this ceiling. The comparative allowances for small and medium-sized companies are 12% and 17% respectively.
71 new drugs to launch to 2010
These incentives are helping to wean Japanese companies off older drugs, which were hit particularly hard in last April’s biennial drug pricing review. According to Goldman Sachs, the seven leading Japanese players lifted their R&D investment by an average of 17.7% between 2004 and 2005. Datamonitor is forecasting that the top 15 Japanese companies will launch 71 new drugs between 2004 and 2010. There is also an emerging biotechnology sector, encouraged by a number of government initiatives such as the Millennium Genome Project. By 2004 there were 464 biotech ventures in Japan, compared 387 in 2003, PwC points out.
But clinical trials remain a sticking point. The problems have been exacerbated by historical factors, such as stigmas attached to clinical studies and poor communication between doctors and patients.
The Ministry of Health, Labor and Welfare (MHLW) recognised the need to revitalise the clinical research environment in 2003, when it launched a three-year programme aimed at encouraging more doctors to take part in clinical trials, providing incentives for patient enrolment and increasing the number of centres operating in accordance with Good Clinical Practice.
This programme, which is now being extended into a second three-year phase, has made a palpable impact. As PwC notes, the number of applications for clinical trials in Japan fell by two-thirds between 1993 and 2003. But a review of the MHLW programme earlier this year found that that the number of trial applications had bounced back by nearly 40% (from 360 to almost 500) in 2003-2005, while the number of hospitals registered for Japan’s clinical trial network had jumped from 270 to 1,170.
PricewaterhouseCoopers remains sceptical about the future, though. Drug testing “is still more expensive in Japan than it is in many other countries, and these problems are compounded by the fact that many Japanese patients are reluctant to participate in trials," it comments. By Peter Mansell