Leading business intelligence provider GBI Research has released its latest research report, entitled "Pharmaceutical Supply Chain in Japan - Periodic Drug Price Revisions by National Health Insurance Increase Competition and Squeeze Profit Margins". The report focuses on the current scenario of supply chain management. Key participants in the pharmaceutical supply chain in Japan are covered in the report as well as issues such as pricing, labeling, packaging, warehousing, logistics, and distribution.
The Japanese pharmaceutical market is the world's second largest market next to the US. However, the industry has characteristics which make it unique and attractive for multinational companies. Pressures such as the aging population, drug price revisions, patent expiries and drug lag have compelled industry leaders to change their business strategies to cut costs and become more agile, and companies are making efforts to rationalize their sourcing and distribution, and increase operational efficiency to this end.
GBI analysis shows that supply chain participants in Japan still follow the traditional route of drugs manufactured by the pharmaceutical companies being distributed entirely through wholesalers to patients via retailers. The top four wholesalers in the Japan namely Medipal Holdings, Alfresa Holdings, Suzuken and Toho Holdings, held a 90% share of overall Japanese pharmaceutical distribution market in 2011.
Pharmaceutical Affairs Law (PAL) regulates the manufacturing, marketing and distribution of pharmaceutical drugs and medical devices in Japan. The rules and regulations set under this law make it difficult for foreign manufactures to set up base in Japan, leading to various Mergers and Acquisitions (M&A) in the industry. The Ministry of Health, Labor and Welfare (MHLW) and the Pharmaceuticals and Medical Devices Agency (PDMA) are the key regulators in Japan.
Healthcare in Japan is primarily paid by the National Health Service, which is administered by MHLW. Drug prices are fixed and controlled by the Japanese government. However, the price at which the manufacturer sells the drug to the wholesaler depends on the negotiations between both the parties and varies from one wholesaler to another. Similarly, pharmacy margins depend on negotiations between the wholesaler and pharmacy. Because of revisions in National Health Insurance (NHI) drug prices in 2010, all the key players in the supply chain suffered losses as they had to compromise on profit margins.
Globalization, free Trade agreements between countries, growing demand for secure packaging, and M&As are some of the key drivers for the Japanese pharmaceutical supply chain.
Scope
Segmentation of pharmaceutical supply industry by its major components such as manufacturers, wholesalers and medical institutions
Key issues and unmet needs of the pharmaceutical supply chain in Japan
Analysis of technologies adopted by pharmaceutical manufacturers and wholesalers to stay competitive in the current scenario
Insights into the legal and regulatory landscape, focusing on laws and regulations followed to obtain marketing, manufacturing and distribution licenses for drugs in Japan.
Understanding of key risks that are encountered by pharmaceutical supply chain participants.
Profile of key companies involved in the pharmaceutical supply chain.
Reasons to buy
Evaluate on the existing market scenario in pharmaceutical supply chain management.
Analyze the requirements for regulatory compliance for pharmaceutical supply chain management.
Gain knowledge of the key challenges and unmet needs of the pharmaceutical supply chain in Japan
Develop strategies for quality control of pharmaceutical supply materials
Develop risk mitigation strategies to enhance risk management
Executive Summary
Pharmaceutical Supply Chain in Japan.
Pressures felt in Japan as a result of the country's aging population, drug price revisions and patent expiries have compelled pharmaceutical industry leaders to rationalize their sourcing and distribution, and increase operational efficiency, according to a new report by GBI Research.
The new report* states that market competition has led to an oligopoly being held by a few wholesalers, who effectively control the country's pharmaceutical distribution market.
GBI Research's analysis shows that supply chain participants in Japan still follow a traditional route, whereby drugs manufactured by pharmaceutical companies are distributed solely through wholesalers to patients via retailers. Drug prices are fixed and controlled by the government; however, the price at which the manufacturer sells the drug to the wholesaler depends on negotiations between both parties. Similarly, pharmacy margins depend on negotiations between the wholesaler and pharmacy. All key players in the supply chain suffered losses due to revisions to National Health Insurance (NHI) drug prices in 2010, which demanded they compromise on profit margins.
The introduction of a price quotation system led competition between drug wholesalers to escalate, while profitability decreased, and this led to mergers and reorganizations which aimed to lower costs and create savings to pass on to manufacturers. As a result, the number of pharmaceutical wholesalers in Japan has fallen by 45% over the last decade, and just a few companies now remain in operation. Four wholesalers, namely Medipal Holdings, Alfresa Holdings, Suzuken and Toho Holdings, accounted for 90% of the overall pharmaceutical distribution market last year, generating a total revenue of JPY7.3 trillion ($87.8 billion).
The Pharmaceutical Affairs Law (PAL) regulates the manufacture, marketing and distribution of pharmaceutical drugs and medical devices in Japan. Its rules and regulations make it difficult for foreign manufacturers to establish themselves in the country, leading to significant M&A activity. The key regulators in Japan are the MHLW and the Pharmaceuticals and Medical Devices Agency (PDMA).
However, this national independence proved an issue in March 2011, when the Fukishima disaster highlighted issues in the country's supply chain. Pharmaceutical production activity became stagnant in certain locations due to a restricted power supply and damage to distribution centers, creating a lag in vital medical products. Industry leaders have since reformulated their supply chain strategies in response to these catastrophes - for instance, Suzuken has formulated guidelines to ensure the supply of pharmaceuticals at times of major disaster, looking to construct a cooperative relationship with hospitals and pharmacies so that products can be delivered directly if supervising branches are not functioning.
Pharmaceutical Supply Chain in Japan - Periodic Drug Price Revisions by National Health Insurance Increase Competition and Squeeze Profit Margins
This report focuses on the current scenario of supply chain management. Key participants in the pharmaceutical supply chain in Japan are covered in the report as well as issues such as pricing, labeling, packaging, warehousing, logistics, and distribution.
This report is built using data and information sourced from proprietary databases, primary and secondary research and in-house analysis by GBI Research's team of industry experts.
Table of Contents
Table of Contents
1. Table of Contents
1.1. List of Tables
1.2. List of Figures
2. Introduction
3. Pharmaceutical Supply Chain in Japan - Overview
3.1. Introduction
3.2. Structure of Supply Chain - Distribution Channels
3.3. Participants in Supply Chain
3.3.1. Manufacturers - Pharmaceutical Companies
3.3.2. Wholesaler
3.3.3. Medical Institutions
3.3.4. Patients
3.4. Evolution of Pharmaceutical Supply Chain in Japan
3.4.1. Traditional Method
3.4.2. New Technologies Implemented in Japanese Pharmaceutical Supply Chain
3.5. How Japanese Pharmaceutical Distribution Differs from that of the US and the UK
3.5.1. Supply Chain Overview
3.5.2. Downstream Supply Chain from Manufacturer
3.5.3. Payment Terms for a Pharmaceutical Manufacturer
3.5.4. Role of Wholesalers
3.5.5. Wholesaler and Pharmacy Margins
3.5.6. Upstream Supply Chain for Pharmacies
3.5.7. Reimbursement Scenario
3.6. Business Strategies Involving Japan and India
3.6.1. Case Study of Daiichi Sankyo and Ranbaxy
3.6.2. Case Study of Lupin
4. Pharmaceutical Supply Chain in Japan - Laws and Regulations
4.1. Manufacturing License
4.1.1. Foreign Manufacturers
4.2. License for Marketing Authorization
4.3. Pharmaceuticals Labeling and Advertising Regulations
4.4. Drug Retail Seller Licensing
4.4.1. Good Post-marketing Surveillance Practice
4.4.2. Adverse Drug Reaction and Infection Reporting
5. Pharmaceutical Supply Chain in Japan - Risk Management
5.1. Supply Risk
5.1.1. Imports
5.1.2. Inferior Quality of Supply
5.1.3. Non-availability of Resources
5.1.4. Natural Disasters
5.1.5. Selection of Supplier
5.1.6. Cost Risk
5.2. Demand Risks
5.2.1. Forecasting Errors
5.3. Miscellaneous Risks
5.3.1. Transportation Risk
5.3.2. Quality Risks
5.3.3. Storage Risk
5.3.4. Information Sharing Risks
5.3.5. Safety Regulations
6. Pharmaceutical Supply Chain in Japan - Securing the Supply Chain
6.1. Pharmaceutical Supply Chain Industry - Key Issues
6.1.1. Drug Price Revision
6.1.2. Inflexible Business Culture
6.1.3. Packaging Issues
6.1.4. Lack of Advanced Planning
6.2. Impact of Government Regulations Regarding Technology Adoption in Pharmaceutical Supply Chain
6.2.1. Case Study: Toho Pharmaceutical Co., Ltd.
7. Pharmaceutical Supply Chain in Japan - Drivers and Restraints
7.1. Drivers
7.1.1. Universal Health Coverage
7.1.2. Growing Demand for Secure Packaging
7.1.3. Japanese Pharmaceutical Industry: M&A trends
7.1.4. Globalization and Emerging Markets
7.1.5. Free Trade Agreements with Various Countries
7.2. Restraints
7.2.1. Drug Price Regulation
7.2.2. Counterfeit Drugs and Drug Traceability
7.2.3. High Cost of Securing Supply Chain
7.2.4. Natural Disasters
8. Pharmaceutical Supply Chain in Japan - Leading Distribution Players
8.1. Medipal Holdings Corporation in Japan
8.1.1. Company Overview
8.1.2. Financial Performance
8.1.3. Initiatives under the 2014 Medipal Medium-term Vision
8.2. Alfresa Holdings Corporation in Japan
8.2.1. Company Overview
8.2.2. Financial Performance
8.3. Suzuken Group in Japan
8.3.1. Company Overview
8.3.2. Financial Performance
8.3.3. Disaster Countermeasures Systems
8.4. Toho Holdings Co., Ltd. in Japan
8.4.1. Company Overview
8.4.2. Financial Performance
9. Pharmaceutical Supply Chain in Japan - Appendix
9.1. Market Definitions
9.2. Abbreviations
9.3. Bibliography
9.4. Research Methodology
9.4.1. Coverage
9.4.2. Secondary Research
9.4.3. Primary Research
9.4.4. Expert Panel Validation
9.5. Contact Us
9.6. Disclaimer
List of Tables
Table 1: Pharmaceutical Supply Chain in Japan, Leading Pharmaceutical Companies, 2011
Table 2: Pharmaceutical Supply Chain in Japan, Members of Japanese Pharmaceutical Wholesalers Association, 2011
Table 3: Pharmaceutical Supply Chain in Japan, Role of Pharmacist in Japan, the UK and Sweden, Differences and Similarities
Table 4: Pharmaceutical Supply Chain in Japan, Pharmaceutical Reimbursement Scene
Table 5: Pharmaceutical Supply Chain in Japan, Working Capital Metrics for Pharmaceutical Manufacturers, 2010
Table 6: Pharmaceutical Supply Chain in Japan, Comparison of Pharmaceutical Reimbursements and Margins in Japan, the UK and the US
Table 7: Pharmaceutical Supply Chain in Japan, Number of Counterfeit Incidents Globally, 2012
Figure 22: Pharmaceutical Supply Chain in Japan, Toho Holdings Corporation, Company Profile, 2011
Pharmaceutical Supply Chain in Japan - Periodic Drug Price Revisions by National Health Insurance Increase Competition and Squeeze Profit Margins published by GBI Research in August 6, 2012. This report consists of Pages: 58 and the price starts from US $ 3500.
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Press Release
Pharmaceutical Supply Chain in Japan - Periodic Drug Price Revisions by National Health Insurance Increase Competition and Squeeze Profit Margins
August 14th, 2012
Global Information Inc. would like to present a new market research report, "Pharmaceutical Supply Chain in Japan - Periodic Drug Price Revisions by National Health Insurance Increase Competition and Squeeze Profit Margins" by GBI Research.
Pressures felt in Japan as a result of the countrys aging population, drug price revisions and patent expiries have compelled pharmaceutical industry leaders to rationalize their sourcing and distribution, and increase operational efficiency
The new report, "Pharmaceutical Supply Chain in Japan - Periodic Drug Price Revisions by National Health Insurance Increase Competition and Squeeze Profit Margins", states that market competition has led to an oligopoly being held by a few wholesalers, who effectively control the countrys pharmaceutical distribution market..
Four wholesalers, namely Medipal Holdings, Alfresa Holdings, Suzuken and Toho Holdings, accounted for 90% of the overall pharmaceutical distribution market last year, generating a total revenue of JPY7.3 trillion ($87.8 billion).
The Pharmaceutical Affairs Law (PAL) regulates the manufacture, marketing and distribution of pharmaceutical drugs and medical devices in Japan. Its rules and regulations make it difficult for foreign manufacturers to establish themselves in the country, leading to significant M&A activity.. The key regulators in Japan are the MHLW and the Pharmaceuticals and Medical Devices Agency (PDMA). However, this national independence proved an issue in March 2011, when the Fukushima disaster highlighted issues in the countrys supply chain. Pharmaceutical production activity became stagnant in certain locations due to a restricted power supply and damage to distribution centers, creating a lag in vital medical products. Industry leaders have since reformulated their supply chain strategies in response to these catastrophes. For example, Suzuken has formulated guidelines to ensure the supply of pharmaceuticals at times of major disaster. The company is looking to construct a cooperative relationship with hospitals and pharmacies so that products can be delivered directly if supervising branches are not functioning.
