NHI Price Cuts Lead to Static Sales in Japan During FY 2006/07

The IMS statistics, which were recently published by Scrip, also revealed that sales to major hospitals (i.e., 100 beds or over) fell by 3% to stand at ¥3.16 trillion, while sales through dispensing pharmacies and other routes grew by 6% to reach ¥2.50 trillion (US$26 billion). The increase in pharmacy sales was attributed to the increased separation of prescribing and dispensing, which has been a traditional feature of Japan's market.

Blopress Consolidates Its Lead

In terms of individual products, Pharma Japan reports that the leading brand in FY 2006/07 was Takeda's hypertension drug Blopress (candesartan), whose sales increased by 5.9% to ¥138.9 billion (US$1.15 billion). This figure is more or less in line with Takeda's own recently published figures, which valued the brand's domestic sales at ¥129.3 billion (+4.6%) in FY 2006/07. Domestic sales of Blopress have, however, been outpaced by overseas sales, as Takeda reported an 8.0% increase in Blopress's worldwide sales to ¥206.2 billion.

Back in Japan, Blopress managed to distance itself from another hypertension drug, Norvasc (amlodipine), whose sales rose by just 1.9% in 2006 to ¥132.1 billion. This figure includes sales of both Pfizer's (U.S.) and Dainippon Sumitomo Pharma's (DSP) version of the drug, with the latter company marketing its version under the name of Amlodin. Following the Dainippon/Sumitomo merger, Pfizer had been in dispute with the NewCo over Norvasc, although the two companies settled their differences in August 2006 (see Japan: 21 August 2006: Status Quo Restored, as Pfizer and Dainippon Sumitomo Settle Norvasc Dispute) and DSP was allowed to continue marketing Amlodin. Reports suggest that the performance of Amlodin has been rather more dynamic than that of Norvasc, and DSP's annual results revealed that Amlodin's sales rose by 4.2% in FY 2006/07 to reach ¥59.2 billion. At the same time, DSP forecast sales of ¥66.0 for the drug in FY 2007/08.

In 2006, the number-three brand in Japan was yet another hypertension drug, namely the angiotensin-receptor blocker (ARB) Diovan (valsartan), whose sales rose by 6.6% to ¥113.0 billion. In January, Swiss company Novartis signed an agreement with Japan's Mochida for the two companies to co-promote the brand from the beginning of February (see Japan: 22 January 2007: Novartis, Mochida to Co-Promote Heart Drug Diovan in Japan). It is too early to assess the impact of the deal, although reports suggest that sales of Diovan since the deal have been growing at a rate of around 4-5%.

The fourth-ranking brand in 2006 was the cholesterol drug Lipitor (atorvastatin), co-marketed in Japan by Astellas (Japan) and Pfizer, whose sales rose by 5.6% to ¥106.0 billion. In January this year, Pfizer received another knockback (following its concessions to DSP over Norvasc) when it conceded that Astellas's rights to Lipitor apply to its crystal form, whose patent does not expire until 2016 (see Japan: 26 January 2007: Pfizer and Astellas Resolve Lipitor Dispute, Finally Receive Celebrex Approval). This was of course an excellent outcome for Astellas, which has been relying on Lipitor to sustain flagging sales in Japan. That said, reports this year suggest that sales of Lipitor have been flattening out.

Outside the "big four", no other brand achieved sales in excess of ¥100 billion. The number-five player, Epogin, experienced double-digit losses in 2006, with sales down by 11.3% to ¥78.9 billion. The performance of the Chugai/Roche anaemia treatment struggled on account of a flat sum reimbursement rate for dialysis products, and Epogin's sales have continued to fall in early 2007. There was, however, some comfort for Chugai when, in early 2007, it beat off the latest patent infringement challenge on Epogin by Ajinomoto (see Japan: 27 February 2007: Chugai Beats Off Ajinomoto Challenge Again). For Chugai, its future will be increasingly tied up in its colorectal cancer treatment Avastin (bevacizumab).

Sartans Drive Sales of Hypertension Drugs

In terms of therapeutic categories, large sales increases for the sartans helped renin-angiotensin sales grow by 6% in FY 2006/07 (see table). Meanwhile, the performance of systemic antibiotics was particularly dampened by the National Health Insurance (NHI) price cuts.

Another category that stands out in Japan is oncology, which has been boosted by an influx of a new generation of products, such as Novartis's Glivec (imatinib). Growth of the oncology category is likely to continue in the medium to long term, as it has been targeted by a number of companies, including Eisai. It has also recently been revealed that French pharmaceutical company Sanofi-Aventis's Taxotere (docetaxel) has been granted Priority Review status by Japan's Ministry of Health.

Companies

Turning to individual companies, IMS Japan classifies a company's performance both by its actual sales to wholesalers and—for products that are co-marketed—in terms of the company that takes a leading promotional role (see table). On both counts, Takeda is in the lead. Looking at the FY 2006/07 results, Takeda reported total sales of ¥1,305.2 billion (+7.7%), with its sales in Japan declining by -2.1% to ¥854.6 billion. This figure is not, however, directly comparable with IMS figures because it includes non-pharmaceutical sales. In common with Eisai, Takeda has recently upped its R&D expenditure, with R&D levels for the two companies in FY 2006/07 amounting to, respectively, 14.8% and 16.1% of sales. Nevertheless this rate still falls some way short of the 18%+ levels for its key rivals, Daiichi Sankyo and Astellas.

Outlook and Implications

Although FY 2006/07 was a very difficult year for the Japanese pharmaceutical industry on account of the severe April 2006 NHI price cuts, the absence of similar cuts in FY 2007/08 means that growth rates in Japan will almost inevitably increase. Nevertheless, there is still severe pressure for Japanese companies to turn their attention overseas, with the results of such a strategy speaking for themselves. In FY 2006/07, strong sales in North America in particular—which were boosted by highly favourable exchange rates—rescued what have otherwise been an unremarkable set of sales figures for most of the leading Japanese drugs companies. At the same time, the drying-out of product pipelines will continue to lead to pressure to invest in increased R&D and to secure licensing deals outside of Japan.