Japanese pharmaceuticals market set for slow growth, as generics make headway

The value of Japanese pharmaceutical market at retail prices will increase at a very modest compound annual growth rate (CAGR) of 1.25%, as measured in local currency, says Business Monitor International. However, when calculated in US dollars, growth will fall into negative territory. The market will reach a value of 9,619 billion yen ($87.45 billion) in 2014, up from of 9,040.1 billion yen in 2009. Over BMI's longer, 10-year forecast, it expects the growth rate to drop to under 1% as public purse-strings are tightened further.

Japan is looking to triple its generics sector by 2012. In 2009, generic drugs represented an estimated 9.4% of the total market by value, with BMI forecasting this share to increase to 15.5% in 2014, and further to 23.5% by the end of 2019.

Despite the low annual growth rate expected in the coming years, the Japanese drug sector continues to benefit from a large relative (per-capita consumption was estimated at almost $750 in 2009), as well as absolute with its population numbering over 127 million usage of medicines. Indeed, in BMI's updated second-quarter 2010 Business Environment Ratings (BERs) table for the 15 key markets in the Asia Pacific region, Japan regained its pole position, previously held by Australia. Globally, Japan is ranked as the fourth most attractive market for multinational drugmakers, after the USA, Germany and Canada.