Recent Movement Concerning the Recent Movement Concerning the - PowerPoint PPT Presentation

Recent Movement Concerning the Recent Movement Concerning the Pharmaceutical Industry in Japan Pharmaceutical Industry in Japan April 16, 2009 Kenshi Kinoshita Director of Economic Affairs Division, Health Policy Bureau Ministry of Health, Labour and Welfare

� Projected Growth Rate in the 2009 Market based on IMS Health Data Country name Growth rate Country name Growth rate USA 1 - 2% UK 2 - 3% Japan 4 - 5% France 4 - 5% Emerging 14 - 15% Germany 3 - 4% countries * Emerging countries: 7 countries including China, Brazil, India, South Korea, Mexico, Turkey and Russia 1

Comparison of Drug Cost, etc. between Japan and Western Countries Unit: % 1996 2006 7 ． 0 8 ． 1 Japan 13 ． 2 15 ． 3 Medical USA expense/ 10 ． 4 11 ． 0 France GDP 10 ． 4 10 ． 6 Germany 21 ． 6 19 ． 6 Japan 9 ． 3 12 ． 6 Drug cost/ USA Medical 14 ． 8 16 ． 4 France expense 13 ． 0 14 ． 8 Germany 82 ． 8 81 ． 3 Japan Public 45 ． 4 45 ． 8 USA spending/ Medical 79 ． 6 79 ． 7 France expense 82 ． 2 76 ． 9 Germany 2 (Source: OECD Health Date 2008)

Drug Cost and its Ratio to Total Medical Expenditure � Recent drug cost remains on the same level at a little over 6 tr � Recent drug cost remains on the same level at a little over 6 trillion yen. illion yen. � The ratio of drug cost to total medical expenditure also remains � The ratio of drug cost to total medical expenditure also remains on the same on the same level after declining from about 30% to about 20%. level after declining from about 30% to about 20%. (JPY) 28.5% 10兆 30% 10 trillion 27.0% 薬剤費 Ratio of drug cost to total 薬剤比率 26.1% Drug cost medical expenditure 24.5% 23.3% 25% 8兆 22.1% 21.9% 8 trillion 21.5% 20.6% 20.6% 20.1% 20.2% 19.6% 20% 6兆 6 trillion 15% 4兆 4 trillion 7.3 7.3 6.9 7.0 6.9 6.9 6.7 6.7 10% 6.4 6.4 6.1 6.0 6.0 2兆 2 trillion 5% 0兆 0% 0 trillion 93 94 95 96 97 98 99 00 01 02 03 04 05 National medical 24.4 trillion 25.8 trillion 27.0 trillion 28.5 trillion 28.9 trillion 29.6 trillion 30.7 trillion 30.1 trillion 31.1 trillion 31.0 trillion 31.5 trillion 32.1 trillion 33.1 trillion expenditure (JPY) Source: Ministry of Health, Labour and Welfare (Prepared on July 9, 2008 based on 3 Drug-3 of the Central Social Insurance Medical Council)

Current Situation of the Pharmaceutical Industry Slowdown Domestic Overseas of growth Pharmaceutical Pharmaceutical manufacturers manufacturers M&A/Alliance 2010 problem Tightening of review Streamlining of Research Intensifying international Department Increase of development Increase of development cost competition cost Exploitation of markets in Exploitation of markets in emerging Promotion of spread of generics M&A/Alliance emerging countries countries Improvement of distribution Drug Medical institutions wholesalers Dispensing pharmacies Improvement of distribution M&A Lack of personnel Management issues Worsening of business conditions Entry from other M&A industries Stagnation of spread of generics Low-cost operation 4

R&D Cost and its Ratio to Sales of 14 Listed Member Companies of the Japan Pharmaceutical Manufacturers Association (JPMA) (100 million yen) （ 億円） 19.9% 16,000 20.0% 17.7% 18.0% 13,590 14,000 15.8% 16.0% 14.7% 11,510 13.8% 12,000 13.7% 13.3% 14.0% 12.3% 9,858 11.5% 10,000 8,874 12.0% 10.1% 7,816 7,724 7,438 8,000 10.0% 6,730 5,987 8.0% 6,000 5,051 6.0% 4,000 4.0% 2,000 2.0% 0 0.0% 00 期末 01 期末 02 期末 03 期末 04 期末 05 期末 06 期末 07 期末 08 期末 09 予想 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 term end term end term end term end term end term end term end term end term end forecast Note) 14 listed member companies of the JPMA: More than 100 billion yen of the consolidated sales ending in March 2008 5

System Design of Special Exception for Drug Price Control Proposed by the ed by the System Design of Special Exception for Drug Price Control Propos Federation of Pharmaceutical Manufacturers’ ’ Associations of Japan (FPMAJ) Associations of Japan (FPMAJ) Federation of Pharmaceutical Manufacturers Drug price Drug price Current system Current system [2] When drug price drops [3] When patent [3] When patent [2] When drug price drops [1] When a [1] When a below the weighted term expires below the weighted term expires After reform After reform system is applied system is applied average price average price The price of an original drug after the The price of an original drug after the launch of a generic is determined launch of a generic is determined depending on the current market depending on the current market When drug price is revised When drug price is revised price. price. Launch of generics Launch of generics Time Time [Coverage of drug price control] [Coverage of drug price control] The drug already listed on the NHI price listing whose weighted average rate of deviation does not exceed the weighted The drug already listed on the NHI price listing whose weighted average rate of deviation does not exceed the weighted average rate of deviation of all items listed on the NHI drug price standard when the drug price is revised and meets the average rate of deviation of all items listed on the NHI drug pr ice standard when the drug price is revised and meets the following requirements: following requirements: � � Drug during the protection period of substance patent or during the reexamination period Drug during the protection period of substance patent or during the reexamination period � � Drug whose generic product is not listed on the NHI drug price standard Drug whose generic product is not listed on the NHI drug price s tandard � � Drug that is indispensable for insured medical care Drug that is indispensable for insured medical care * * Within 15 years after the listing in simulation Within 15 years after the listing in simulation * * It does not exceed the rate of deviation (6.9%) when the drug price was surveyed in 2007 in simulation It does not exceed the rate of deviation (6.9%) when the drug pr ice was surveyed in 2007 in simulation [Revision of the drug price when the drug will no longer meet the requirements for the Special Exception for Drug Price e requirements for the Special Exception for Drug Price [Revision of the drug price when the drug will no longer meet th Control] Control] At the revision of drug price, the amount of difference between the price of the relevant drug and the price when the the price of the relevant drug and the price when the At the revision of drug price, the amount of difference between Special Exception for Drug Price Control was not applied is accumulated and reduced. In the revision of the drug price mulated and reduced. In the revision of the drug price Special Exception for Drug Price Control was not applied is accu after the listing of generic products, the special reduction associated with the listing of generic products is further applied. ociated with the listing of generic products is further applied. after the listing of generic products, the special reduction ass [Timing to introduce the Special Exception for Drug Price Contro [Timing to introduce the Special Exception for Drug Price Control] l] The Special Exception for Drug Price Control will be introduced The Special Exception for Drug Price Control will be introduced in 2012 and, among the all listed drugs whose substance in 2012 and, among the all listed drugs whose substance 6 patents are valid as of April 2012, the drugs that meet the abov patents are valid as of April 2012, the drugs that meet the above requirements will become the targets. e requirements will become the targets.

Satisfaction with Treatment and Contribution of Drugs Satisfaction with Treatment and Contribution of Drugs Contribution of drugs with regards to treatment 100% Peptic ulcer Trend: Drug price difference is becoming Tuberculosis 90% bigger than the Hyperlipidaemia Hypertension average drug price Gout 80% Asthma Angina pectoris Diabetes Allergic rhinitis 70% Epilepsy Arrhythmia Myocardial infarction Cardiac failure Depression Prostatic hyperplasia Anxiety neurosis 60% Functional dyspepsia Glaucoma Chronic hepatitis B Rheumatoid arthritis Chronic hepatitis C Leukaemia 50% MRSA Parkinson’s disease Nephrotic syndrome Inflammatory bowel disease Prostate cancer Endometriosis Irritable bowel syndrome SLE 40% Schizophrenia Dermatitis atopic Cerebral Osteoporosis Chronic obstructive pulmonary Overactive bladder syndrome infarction disease Breast cancer Glomerulonephritis chronic AIDS Psoriasis Cerebral haemorrhage (including 30% subarachnoid haemorrhage) Gastric cancer Colorectal cancer Stress urinary incontinence Decubitus Multiple sclerosis Arthrosis deformans Renal failure chronic Diabetic nephropathy Uterine myoma 20% Hepatic cirrhosis Uterine cancer Lung cancer Hepatic cancer Diabetic Sleep apnoea syndrome Drug price difference is neuropathic ulcer Age-related macular degeneration 10% relatively smaller than Vascular dementia Diabetic retinopathy the average drug price Alzheimer's disease 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 7 ource: Japan Health Sciences Foundation: 2005 Report on Survey of Domestic Key Technologies, Prospects for Medical Needs, Satisfaction with treatment 2015, partially modified, obtained from Mr. Aoki, Chair of Astellas Pharma Inc.