Ask anyone in the life sciences field to list today’s global titans of industry and you’ll see Japan on every list. Over the past 25 years, Japan has grown to be one of the top producers of scientific knowledge in the world. With the second largest individual pharmaceutical and medical devices market, Japan spends over 10% of its annual GDP on healthcare. Further, the country has among the greatest business expenditures on R&D in the world. According to Scientific America’s 2016 Worldview Scorecard, in a search of PubMed’s papers on biotechnology, over 16,000 of them were affiliated with Japan. While recent developments have brought rich growth to the industry, Japan’s biotechnology history began well before that.
The country’s history of using fermentation processes in as early as the third century gave scientists their first understanding of biotechnology. From these ancient times until the 1870s, traditional fermentation practices had only been used in the context of the food industry. It wasn’t until the establishment of governmental colleges and science and technology research programs in the mid-1870s that the study of microorganisms popularized. As this research developed into the early 20th century, Japanese companies expanded their portfolio outside of fermentation and traditional herbal medicine to incorporate Western-style drugs. This forever changed the Japanese market and served as a catalyst of the growth to come.
The post- WWII era, marked a leap forward for the country’s economic landscape. In the early 1950s, Japan’s Ministry of International Trade and Industry (MITI) implemented expansive measures to support industrial growth in the country, with banks serving as primary financiers. This resulted in an unprecedented level of insular economic growth. Japan’s real GDP grew so much that it averaged over 9% annually. For context, Japan’s real GDP growth over the past 15 years has hovered below 5%. The rapid growth allowed the country’s technologies to catch-up with further advanced economies. This would later mean great business opportunities for the country.
While Japan’s electronic and automobile economy developed considerably through the early 1980s, it’s biotechnology industry had yet to blossom. The industry had limited R&D focused firms and government policies that shielded Japanese companies from foreign competition. Its highly protective environment held strict capital controls and tariffs enabling the domestic industry to develop, and allowed for incremental innovation. Gradual market expansion occurred but was predominantly focused within the Asian market. While Japan had made progress in expanding foreign market access, it had yet to gain significant global momentum.
The 1990s brought a flood of government policies that shifted manufacturing-centric models to refocus on biotechnology -based R&D. This new environment, coupled with regulatory reforms in the early 1990s, expanded Japan’s global life science footprint.
This globalization accelerated the number of Japanese companies expanding abroad, and further encouraged foreign companies to enter the Japanese market. Companies such as Takeda and Eisai expanded abroad to take advantage of these new global operational capabilities and developed markets. Japan had finally made its big international debut.
The regulatory reforms in the early 1990s further supported Japan’s role in the global biomedical industry. In 1990, the Japanese government joined The International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH). With the founding of ICH, goals of reducing duplicative development inefficiencies in the global industry were pushed to the forefront. Japan’s role in ICH reinforced its new global role. As a part of Japan’s international harmonization efforts, its regulatory authorities effectively streamlined drug development in Japan and upgraded the quality of the country’s clinical trials to globally accepted standards.
Not only did Japan’s role in ICH harmonize pharmaceutical regulations improve manufacturing linkages in the drug regulatory pathway, it encouraged a wave of entrepreneurship. Japan’s new collaborative approach made it easier and faster for high-quality drugs to be developed and funneled through the regulatory process. This incentivized entrepreneurs to innovate with potential for high rewards.
Further, government initiatives to facilitate technology transfer and create small and medium-sized regional enterprises led to an even greater explosion of entrepreneurship in Japan. With all this entrepreneurship, what was a country to do?
Invest, Adapt, and Discover!
And that’s just what they did.
With one of the world’s fastest growing aging populations, Japan currently faces a number challenges brought about by the demands of its demographic shift. With over 35% of the population expected to be over the age of 65 in 2030, biotechnology companies, both in Japan and abroad, are needed to provide solutions to treat chronic and long-term diseases for over 40 million people.
Current Prime Minister Shinzo Abe has highlighted aging as a national crisis. After his election victory in 2017, Abe notes that Japan’s decreasing and aging population is “the biggest challenge” for his Abenomics policy initiative. He states, “The problem is progressing by the minute, and [Japan] cannot afford waiting around.”
The political and socio-economic impacts of an aging population cannot be understated. Aside from the effects of a declined labor force, population aging will yield rising health demands that need to be addressed. Without a comprehensive and effective pricing and reimbursement framework, costs for the treatment of non-communicable diseases associated with aging will strain Japan’s economy. Addressing these challenges will require close coordination between government and the industry. The world’s top innovators are developing solutions to address these challenges, and foreign companies are seeking Japanese and global partners to collaborate with.
While the development of solutions is still underway, Japan has already demonstrated its commitment to the success of its biotechnology field. Since the late 1908s, Japan has produced four Nobel Laureates in the Physiology or Medicine category. In 2012, Shinya Yamanaka and fellow researcher, John Gurdon, won the Nobel Prize in Physiology or Medicine for their innovative work in stem cell research. Their numerous accolades reflect Japan’s commitment to scientific research and growing the biotechnology field.
Developing these global collaborations and solutions are critical. The BIO Asia International Conference offers the avenue to do just that. In its 15th year, the BIO Asia International Conference offers an exclusive partnering forum to bring together the global biotechnology and pharmaceutical community to understand and address these challenges. It provides the premier platform to explore licensing and research collaborations in the current Asia-Pacific business and policy environments. The conference offers further insight into the changes, challenges, and opportunities key policy leaders foresee for the Japanese market.
Japan’s rich history of biotechnology has established a framework to address the challenges ahead. Accordingly, we look to you, the scientists, entrepreneurs, researchers, investors, and government to help shape the next 25 years of biotechnology. Help us make history!