Japan’s pharmaceutical market is the second largest in the world – larger than that of France, Germany, and the UK combined. The total market size is between $50 and $55 billion. However, the market size, measured in dollars (or yen) is shrinking. This is because the Japanese government has been quickly moving to lower national drug and drug reimbursement costs. Historically, drug expenditures accounted for 25 – 30% of Japan’s overall healthcare spending. This figure has decreased markedly to about 20% — a significant improvement, but still considerably higher than in the United States (6%) or the United Kingdom (12%).
With lower spending on pharmaceuticals, foreign drug manufacturers in the Japanese market are competing for a slice of a contracting pie. However, U.S. pharmaceutical firms have managed to do well in the market, primarily through launching new products. Pharmaceutical treatments for cardiovascular aliments, the central nervous system, digestive system, diabetes, and other diseases/disorders common with elderly populations will see increased demand as Japan’s population ages. Other categories that do well in Japan include gastrointestinal products, antibiotics, cancer treatments, diagnostic reagents, bio-tech products, dermatological treatments, and vitamins/nutritional supplements.