Recent Trend of Generic Medicines Market In Japan Joint 22 nd EGA and 19 th IGBA Annual Conference Dubrovnik, Croatia 9 June, 2016 Itsuro Yoshida President of Japan Generic Medicines Association Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 1 JGA : Japan Generic Medicines Association Founded: 1965 Members: 41 companies, 11 affiliate members (as of 2016/4) President: Itsuro Yoshida (since 2013) (President of Towa Pharmaceutical Co., Ltd.) JGA is the sole association in Japan which consists of Marketing Authorization Holders of generic medicines. JGA aims to contribute to the advancement of public health and welfare by supplying stably generic medicines with high quality and with reasonable price as well as to forwarding the common benefit of the members. JGA s English website http://www.jga.gr.jp/english/ Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 2 1
Transition of Population Population growth and forecast Total population: million 128.1 million in 2010 Total population: 126.6 million in 2015 65 years old and over: 34 million in 2015 65 years old and over: 39 million in 2040 65 years old and over Source) Population Statics 2015 by National Institute of Population and Social Security Research, Population Statics Data by Ministry of Internal Affairs and Communications Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 3 Future Population Structure in Japan Population Rate of 65 Years Old and Over 40% 35% 30% 29.1% 31.6% 30.3% 33.4% 38.8% 39.4%39.9% 37.7% 36.1% 25% 23.0% 26.8% Japan is now on the way to the full-fledged aging society. 20% 20.2% 15% 17.4% Source) National Institute of Population and Social Security Research Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 4 2
FY1991 FY1992 FY1993 FY1994 FY1995 FY1996 FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2015 FY2025 Breakdown of National Medical Expenditure by Age Group (FY2013) The age group of 65 years old and over consumed 57.7% of total medical expenditure. Age group Expenditure (Trillion JPY) 0-14 years old 2.45 6.1 15-44 years old 5.20 13.0 45-64 years old 9.30 23.2 65 years old and over % 23.11 57.7 Total 40.06 100 Source) The Ministry of Health, Labour and Welfare Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 5 Prediction of National Medical Expenditure The national medical expenditure is estimated to become about 61 trillion JPY in FY2025. 700,000 70 600,000 500,000 400,000 300,000 200,000 100,000 0 Medical Expenditure (trillion JPY) 45.7 Source) The Ministry of Health, Labour and Welfare Estimation ca.61 10 years later estimation (in FY2025) ca.61trillion JPY = 550 billion USD = 470 billion EUR Current expenditure (in FY2015) 45.7 trillion JPY = 415 billion USD = 351 billion EUR Exchange Rate 1 USD = 110 JPY 1 EUR = 130 JPY Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 6 3
Development of National Policy for Promotion for Generic Medicine Use Action Program 2007 The MHLW issued Action program for Promotion of Generic Medicine Use in October 2007. Roadmap 2013 The MHLW issued Roadmap toward Further Promotion of Generic Medicine Use in April 2013, with new target aiming at share of 60% or above by the end of FY2017. Basic Policy on Economic and Fiscal Management and Reform 2015 Revision of Targeted Volume Share of Generics Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 7 Revision of Targeted Volume Share of Generics Basic Policy on Economic and Fiscal Management and Reform 2015 (30 th June 2015) The target volume share of generics has been revised from 60% or above by the end of FY2017 to 70% or above by mid-2017 as a step toward achieving 80% or above, and it is planned to attain the target goal of 80% or above at the earliest date possible between FY2018 and 2020. A detailed time-table for attaining 80% or above shall be finally set through evaluation of actual progress in volume share of generics by mid-2017. New Targeted Volume Share Step1 Step2 70% or above by mid-2017 80% or above at the earliest date possible between FY2018 and 2020. Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 8 4
Schematic Figure of Targeted Volume Share of Generics 80.0% 70.0% Volume Share of Generics (%) 80% 70% Mid-2017 60.0% 56.2% 60 % 50.0% 40.0% 30.0% 32.5% 34.9% 35.8% 39.9% 46.9% Former Target 60% or above by the end of FY2017 20.0% Source) The Ministry of Health, Labourand Welfare 1) Generic volume share from Sept.2005 to Sept.2015 are based on biennial drug price-volume market survey by the Government 2)The Ministry of Health, Labour and Welfare estimates that increasing the use of generics from nearly 47% volume share in FY2013 to 80% by FY2020 would save 1.3 trillion JPY. Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 9 Volume Share of Generics Comparing US and EU Countries Average Volume Share of Generics October 2013 - September 2014 100% 80% 8% 51% 17% 27% 43% 36% 35% 60% 40% 20% 92% 49% 83% 73% 57% 64% 65% Off-patent Originator Medicines Generics 0% Source) The Ministry of Health, Labour and Welfare on the basis of IMS,MIDAS, Market Segmentation, MAT Sept.2014 RX only Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 10 5
Overview of NHI-related Approaches for Promotion of Generic Use Fees Others Hospitals/Clinics Prescription Pharmacies Medical Fees Additional fee in Inpatients and Outpatients Services which use of generics over a certain ratio to pharmaceuticals replaceable by generics Additional fee for INN Prescribing Dispensing Fees Additional fee which dispense of generics over a certain ratio to pharmaceuticals replaceable by generics Fee for providing generic information to patients (Providing generic information has become one of the essential elements for obtaining a pharmacy care fee) Basic Rule for NHI Medical Services Prioritizing use of generics has been stipulated and guided. Change of Prescription Form Prescription form has been changed to facilitate substitution to generics. Substitution to Generics at Pharmacies Not only substitution of generics of the same strength and formulation as the reference innovator but also of different strengths and formulations (except for external drugs) is allowable. Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 11 Generic Penetration by Entry Year Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 12 6
FY1990 FY1992 FY1994 FY1996 FY1998 FY2000 FY2002 FY2004 FY2006 FY2008 FY2010 FY2012 FY2014 FY2016 Recent Trend of Volume Share of Generics 70% Volume Share of Generics (%) (Quarterly surveyed) 70% 60% 50% 40% 53.2% 49.8% 51.3% 49.5% 44.9% 43.1% 43.1% 54.4% 56.1% 54.2% 54.7% Source) JGA & IMS Japan Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 13 Pricing of Initial Entry Generics Initial generic prices fixed to the % of innovator medicine price In case of oral formulation 100% 80% 60% 40% 20% 0% Application Fiscal Year % of innovator medicine price - FY1993 100% FY1994 1995 90% FY1996 2003 80% FY2004 2011 70% In case number of GE entry exceeds 10 FY2012 2013 70% 60% FY2014 2015 60% 50% FY2016 50% 40% Initial generics prices have been lowered. Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 14 7
Targeted Volume Share of Generic Medicines (by number of tablets) July 2015 - March 2021 Sharp Increase of Target Volume Share FY2018-2020(Targeted Share 80%) 100 billion Tablets Mid-2017(Targeted Share 70%) 84 billion Tablets Basic Policy on Economic and Fiscal Management and Reform 2015 (30 th June 2015) April 2013 - March 2018 Roadmap Revision of Targeted Volume Share October 2007 March 2013 Action Program End of FY2017(Targeted Share 60%) 72 billion Tablets FY FY2012(Actual Share 40%) 43.5 billion Tablets 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 15 Status of Production Capacity and Capital Investment of Generic companies Billion Tablets 120 100 80 60 40 Targeted volume by number of tablets 2012 (40%) 43.5 billion Tablets Mid-2017 (70%) 84 billion Tablets 2014 (52%) 56.5 billion Tablets 2018-20120 (80%) 100 billion Tablets 20 0 Sum of production capacity of GE companies Actual (Oral formulations) Sum of production capacity of GE companies Forecast (Oral formulations) Capital Investment Amount : Total 321.6 billion JPY Loans payable : Total 200.7 billion JPY Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 16 8
Players in Japanese Generic Market Generic Companies Generic/Domestic Generic/Global Domestic Companies GE Market Growing Competition & Complexity Global Companies Innovator/Domestic Innovator/Global Innovator Companies Assuring stable supply is a key priority for all of players. Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 17 Summary 1. The expanding of generic medicine use is firmly positioned as a contribution tool to the sustainable national health insurance scheme for the coming aging society. 2. Generic companies are required to develop their production capacity and APIs procurement in response to sharp increase in demand of generics. The capital investment for increase of production capacity to meet 80% volume share has been in progress. 3. Sharply growing generic market carries with growing competition and downward pressure of prices. Efficient and tough shape of industrial structure will be requested not only for generic companies, but also for innovators in total. Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 18 9
Summary 4. 5. Further measures for promoting generic medicine may be limited by the era of 80% generic volume share. The demand to individual generic company in such era is to transform its company structure adapted to the environment of rapid growth based on the promotion of generic medicine use into that required for sustainable growth after rapid growth stage. Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 19 Thank you very much for your kind attention Copyright 2016 Japan Generic Medicines Association All Rights Reserved. 20 10