The Japanese House of Representatives passed and enacted the revised Pharmaceutical Affairs Law on July 25, 2002. The revision of the law will facilitate start-up pharmaceutical and medical device companies that do not have production facilities in Japan to enter into the market. In addition, the new law will divide the conventional scope of the manufacturer into a “manufacturing stage” and a “sales stage,” while the Gyo-Kyoka/Shonin (license/approval) will turn its focus more on “sales” and “post marketing safety measures.”
Previously, start-up companies were obligated to manufacture their own products without contracting out to a third party. However, the revised law allows these companies to outsource their production and focus instead on R&D and sales. In order to maintain standards, companies that outsource will be required to establish quality control divisions to supervise the quality and safety of their products. The direct access system for foreign manufacturers will be maintained. Foreign manufacturers, however, will also be responsible for quality assurance and post marketing safety measures.
The revision will bring Japan’s medical manufacturing market closer in line to those of the U.S and Europe. Currently, there are approximately 3,000 pharmaceutical start-up firms in the U.S. while there are only 100 in Japan. The law will provide greater flexibility to the Japanese start-up companies and grant them greater access into the pharmaceutical market in Japan.
Already, many Japanese companies are restructuring in order to take advantage of the law revision. Shionogi & Company, one of the largest drug manufacturers in Japan, is planning to spin off five factories into separate companies. By doing so, Shionogi plans to generate more income by outsourcing their production facilities to smaller start-up companies.