In this briefing:
1. Japan Pharma – Domestic Market and Long Listed Drug Exposure
- The Japanese government recently announced its decision to initiate an ad-hoc price reduction of ~4.35%, to be levied in October 2019, this will be in addition to the scheduled biennial price revisions (source).
- The October 2019 scheduled price cuts will have nominal overall impact; however, we highlight a few companies that are relatively more vulnerable to ongoing price reforms.
- Mitsubishi Tanabe, Taisho, Santen, Kaken, Kyorin and Kissei generate >50% of revenue from the domestic market and are projected to continue to do so over next 3-5 years.
- Furthermore, the contribution from long listed (LL) drugs is much higher for the above-mentioned companies, which makes them relatively vulnerable to ongoing price reforms (price cuts for LL drugs are much higher than the average).
- On the other hand, Ono, KHK and Nippon Shinyaku, despite a high proportion of domestic revenue (as a % of total revenue), have only limited contribution from LL drugs.
- Ono’s Opdivo, however, will continue to face market expansion led special price cuts going forward.
Source: Company data, Pathology Associates research
* Companies with financial year ending December, Taisho domestic pharma includes OTC sales, N Kayaku domestic pharma sales includes Generics and Biosimilar sales
