Japan, the second-biggest pharmaceutical market in the world, remains the toughest to crack for India’s generic drug makers.
Despite several attempts to go beyond beachhead-level operations over the past few years, companies haven’t made much headway.
“Apart from the language barrier, the stringency in the regulations for supplying our products directly or even have partnerships in Japan is a deal spoiler. The size of the market there is sure a big lure, but it’s not a low-hanging fruit,” a senior official of a pharma company which exports to the US and Europe said. This person did not want to be named.
Medicines worth about $70 billion (Rs3.82 lakh crore) are sold every year in Japan, with prescription drugs constituting about 7% of sales.
Local majors such as Ranbaxy, Dr Reddy’s, Lupin and Zydus Cadila have all been priming themselves for the expected boost to generics in Japan.
“The basic problem is with product approvals. The Japanese regulator requires bioequivalence tests to be conducted inside Japan. There have been efforts to explain to them that even the US and Europe allow them to be conducted in India or elsewhere. But the authorities have their own set of rules,” said another senior pharma official.
“Doing those tests costs Rs5-10 crore or more. And we are not even certain of getting an order,” this
Generics now constitute about 20% of the total pharma sales in Japan. This is seen rising to about 30% in a year and 50% in phased manner – that’s a market size of $35 billion or Rs1.92 lakh crore.
In comparison, India’s pharma sector tots up revenues of $22 billion, including exports.
The Indian government is doing its bit to ease the way.
“The government has a vision to improve our exports to Japan. However, the Japanese understanding of Indian pharma is not that good compared with the US and Europe. We launched the Brand India Pharma project in March 2012 in Japan,” P V Appaji, director general of the Pharmaceuticals Export Promotion Council, a government of India initiative, told DNA Money.
“We are in touch with generic associations there. There have been several enquiries to Indian companies. Now, the interest level is increasing. We also organised the visit of Japanese journalists to pharma facilities in India. It was an eye-opener for the senior editors who said they did not have such information about India’s pharma sector till then,” Appaji said.
The industry was expecting the big opportunities after India signed the Comprehensive Economic Partnership Agreement (Cepa) with Japan recently, but that hasn’t happened so far.
“Japan has agreed to give equal treatment to Indian products after signing of Cepa recently. Even now, it is not that they are not treating us equally. The fact is the conditions in Japan are rigid. We are trying to educate our people. We are translating information into local language about product registration. We are hopeful that the efforts will bear fruit shortly,” Appaji said.