Japan Plans Greater Generics Substitution

According to international reports, Japan's health ministry is to permit greater substitution of branded drugs with generic medicines. New plans envisage adding a further sentence to doctor prescriptions, advising pharmacists that bioequivalent generics may be substituted for branded equivalents. The changes are due to be effective from the third quarter, along with further cost-cutting reforms to reimbursement practices.

Japan's generics market was worth some US$5.88bn in 2004, equal to just 6.4% of pharmaceutical sales in the year. In volume terms, generics account for a much higher share of roughly 16%, and the sector's rate of growth was also higher in volume terms in 2003-04. Data from the country's Ethical Pharmaceutical Manufacturers' Association indicate that sector growth to the level in the US and much of Europe could reduce Japan's overall prescription drug spending by a sixth, to some JPY5trn (US$45.74bn).

Nevertheless, that possibility seems relatively distant at present, given the Japanese government's cautious approach toward encouraging generic substitution. If, however, local generics makers were able to commercialise products more rapidly after patent expiry and boost marketing capabilities, a reduction in sales of off-patent branded drugs could bring sector value to more than JPY1.596trn (US$15.17bn) by 2009.